Most people in North America are bogged down by debt. Car loan debt, student loan debt, mortgage debt and most importantly credit card debt.
Credit card debt is the easiest to access and easily the worst form of debt that one can amass. Most credit cards have an interest rate that starts at 10% annually and others even run up to 20% and 30% depending on the special extras associated with that card.
Credit card companies entice you with so many special incentives, but most people fail to realize that they could and should get a line of credit instead.
A line of credit is a loan from the bank that is similar to that of a credit card, but just with much lower interest rates. Some may be 2% or 3% or maybe up to 5% or a little more. However, it is to be noted that they are much lower than credit card interest rates no matter how you look at them. Anybody who would choose a credit card over a line of credit to gain access to some borrowed funds is surely ignorant of the benefits.
I know of a man who managed to amass $75,000 in credit which he used to finance a project that blew up after a year or so.
This man who didn’t even make $2,000 from the profit of this project ended up being responsible for a whopping $90,000 after two years because of his ignorance.
If he had known better (he really wouldn’t have started this project) could have simply opened up a line of credit and saved him self a whopping $16,000!
Granted it is easier to get access to the plastic than a line of credit, however if your credit rating and monthly income is enough to get you $75,000 you can be sure that the bank will lend you at least $50, 000 in the form of a line of credit.
So, if you are looking for some borrowed money to open your restaurant or do some renovations or any other project, don’t be like the man in the before mentioned story. Apply for a line of credit before swiping that card and save thousands of dollars of interest in the process. It may not be easier to obtain but it is easier to manage and also easier to pay back, so make the right choice.