Private credit or credit card? Switzerland

Do you want to buy furniture in a Fly shop with Myone paper, DIY material with Jumbo paper, or to fill up on clothes with Manor paper?

But on balance, wouldn’t it be better to calculate the total amount of expenses and request a credit from a broker or a bank rather than buying with a credit card?

From what moment is it interesting to pay with a credit card or with the money obtained thanks to a private loan? What are their respective advantages and disadvantages?

 

Amount loaned

Amount loaned

With a credit card there is no minimum amount and the maximum ceiling is for the majority of the population of 10,000 USD per credit card, except for people who enjoy an excellent financial situation.

For private credit, the amounts lent generally start at 5,000 USD (in some cases 3,000 USD) and go up to  250,000 USD. This fork varies from one bank to another.

 

Use of the sum

With the credit card, the flexibility is total , since it is possible to withdraw money at any time and until you have reached the credit limit. Refunding purchases on credit entitles you to start withdrawing money on your card again.

On the contrary, with private credit you can start spending when the money has been paid into your account by the bank. Refunds do not extend the credit line. To do this, you need to apply for another loan.

 

Interest rate

credit loans

Credit card interest rates are very high, close to around 15%, except for the free COOP and Cream cards which have a 9.9% rate.

Personal credit rates start at 5.9% with the Cream bank.

 

Duration of the refund

With the credit card the repayment duration can be unlimited.

The repayment duration is limited with a private loan. It is a minimum of 6 months and can reach 10 years, as in the case of Good Lenders Finance.

 

Expenses

money loans

In addition to interest rates, credit cards also invoice you for expenses such as an annual fee in the case of some cards, but also expenses related to ATM withdrawals or payment fees.

With a consumer credit you only pay the monthly payment which also includes interest. So, no additional expenses!

 

Over-indebtedness risk

Personal loans and credit cards each have their share of responsibility in over-indebtedness for families in Switzerland (1 in 10) and young people (1 in 4).

But the problem with cards is more subtle: you can get used to paying low amounts every month and gradually increase them with various credit cards without realizing that you have exceeded the ceiling.

 

Grouping of credits

credit loan

Everyone can have various credit cards, but as debt increases, rates remain high and management is complicated.

Thanks to a credit company it is possible to carry out a credit grouping which consists of:

  • group all monthly payments into one
  • reduce the total monthly amount thanks to a lower interest rate

 

Conclusion

The credit cards are fine for small expenses. They are more flexible in terms of using the amount and remorse. On the contrary, they are more expensive and the risks of over-indebtedness are more insidious.

As a general rule, private credit is recommended for large expenses. For example, if you move to a new apartment (new living room, appliances and multimedia devices, moving expenses, etc …) or your family is expecting a child (room furniture for the newborn, clothes, etc …) calculate the total amount of expenses and if they reach USD 5,000 or more we strongly recommend that you ask for a private credit to pay less interest.

Finally, if you own multiple credit cards and the accumulation of debt becomes considerable, ask for a credit renegotiation to reduce the interest rate and simplify your life by paying a single invoice!

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