Your Financial Options in a Holiday Cash Crunch

With spending at an all-time high during the festivities, money might be tighter than it has been all year. Borrowing a little bit of cash can extend your budget, giving you a slight boost to your purchasing power. 

But should you borrow? And what kind of loan is best suited for your needs?

Let’s break it down by financial product. Below, check out the common personal loans with examples of when you could use one this holiday. 

Credit Cards

Credit cards are the most popular ways to borrowing during the holidays. The plastic in your wallet follows you with every shopping trip because it’s designed with everyday spending in mind. 

You can wrack up points and rewards with each swipe, they come with purchase protections, and they’re a secure way to shop online. In fact, they might be the only way you can purchase or reserve certain items online, like a rental car or flight home for the holidays.

But with a large limit, credit cards can convince you to spend more than you have on hand. That’s why it’s important you budget for every swipe. You only ever want to use your cards when you know you can pay off your balance by the due date. Barring that, you should have a plan in place to repay it as quickly as possible in emergencies. 

Lines of Credit 

A line of credit is the credit card’s close cousin. They’re both examples of revolving credit, which means you’ll receive a credit limit, not a loan amount. 

As long as you pay off your purchases, you can access this limit continuously until you (or your lender) close the account. There’s no fixed term — although you will be expected to make monthly payments — so you could possibly keep your line of credit on standby for years. 

While they may be similar, they function differently. The plastic in your wallet may help you buy groceries and gifts, but your line of credit is designed for emergencies. Financial advisors recommend keeping this account off limits until an unexpected expense comes your way. Like if you crack a tooth on some chocolate bark, a line of credit may help you afford an emergency dental intervention. 

Installment Loans

With the installment loan, this list finally breaks from revolving financial products. Now, we’re discussing fixed term personal loans. An installment loan delivers a predetermined amount of money you must repay by a predetermined schedule.

The installment loan got its name for its repayment style. You pay off your loan in several installments, spread over multiple weeks or months. 

Like the line of credit, an installment loan is best used for emergencies. If you need help repairing your furnace, an installment loan may boost your budget. But don’t consider these loans to help you travel or purchase gifts for the holidays. 

Christmas Cash Advances

A cash advance is another emergency loan best used for unexpected expenses. However, you should be cautious when taking out these advances, as they’re often due all at once. In some cases, lenders may set your repayment date just 2 weeks after you borrow the money. This short turnaround can be hard for many people, especially during the holidays. 

Like any option on this list, you never want to miss a due date as late fines and other penalties apply. Consider the rules of borrowing outlined here today, and always confirm with your budget that you can afford it.

Jason Holder

My name is Jason Holder and I am the owner of Mini School. I am 26 years old. I live in USA. I am currently completing my studies at Texas University. On this website of mine, you will always find value-based content.

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