I was using your online calculators to see how long it would take to pay off my car and I’t gave me two different answers one for credit card and the other for loan. What is the difference?
Paying off your credit card is different than your loan because the interest on the credit card is variable. The loan is better because it has a fixed interest rate, meaning you know exactly when you are going to pay it off, because you have the same monthly payment.
what is the difference between paying a credit card versus paying a loan?
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Credit card – think mastercard, visa or retail card where you have a limit of what you can charge on that card. Go into a store and purchase various items with a credit card. Then you make payments on that credit card each month (monthly payment depends on the balance) The Interest accrues on that card each month.
Loan – Is something that you finance through a lender and pay back in installments over a certain period of tiem. LIke a car you would usually finance over a 4 or 5 year time frame. You have a set monthly payment…. and with a loan the interest is usually calculated into the monthly installment (payment).
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Paying off your credit card is different than your loan because the interest on the credit card is variable. The loan is better because it has a fixed interest rate, meaning you know exactly when you are going to pay it off, because you have the same monthly payment.
References :