Should I get a $25,000 loan at 5.0% apr or a credit card at 8.9% apr?
I’m doing ok financially i guess. A small savings account, but money going in it regularly. I am saving for my retirement and that’s ok. But I have an opportunity to get a loan or a credit card. At the moment I dont have any credit cards and I think having some back up cash whether it be credit card or loan money is a good idea. What do you think, and which is my better option.
I’m not sure why you would get a loan you didn’t need. Are you looking to purchase something for $25k?
You should look at the return on each of these 2 ideas, as well as the return on continuing to save your extra money instead. The loan will cost you 5% interest, the credit card if used will cost you almost 9% interest. The savings will MAKE money for you. If you aren’t in need of the money, there’s no reason to take out a loan. If there are no fees associated with the card (such as yearly fees or inactivity fees), then it won’t hurt to get it, and put it in your sock drawer and never use it unless it’s an emergency. Then you have the card for emergencies, as well as improving your credit score, without any of the costs.
Also, if your savings account is all you’re contributing to, then you aren’t saving for retirement. No saving account offers a better interest rate than inflation, while it may not be feasible right now, you should look into an IRA at some point in the future. It sounds like you’re in pretty good financial shape right now though, if you qualify for that sort of loan.
Don’t get a loan ANYWHERE with 8.9% apr.
If is not a good idea to do it for "back up cash". If you are going to do it anyway to get cash, then go with the 5% loan, which is somewhat less bad than the 8.9% credit card, but still not good.
borrow 25k just to have cash on hand? Not a good idea. Instead of paying 5%, you could continue to put money into savings and earn interest instead.
The credit card may be useful if you use it correctly. Be sure it doesn’t have an annual fee and pay your balance in full each month.
Loan habits/thinking …not at all advisable.
keep that for future emergencies.
All the best.
Get a credit card and use it to improve your credit rating.
Do not get a loan for no apparent purpose… the whole story sounds fishy.
Banks don’t just hand out loans without a need or a collateral. Chances are you are being stalked by a scammer. If they need you to send them money first to pay for processing fees, etc… then it is a scam where they run off with your money and you never see a penny of your "loan".