Nowadays when we need to borrow money, there are a wide array of options to choose from… personal loans, credit card deals, second mortgages, and more. The question is, which one is right for you? Hopefully, this article will help you answer that question.

Personal Loans
A few decades ago (before credit cards caught on) it used to be that personal loans were the most popular option. A person would go to a bank, and based on his or her credit record, they would be able to borrow a few thousand dollars.

Today (at least in the United States) you rarely – if ever – see this financial tool being advertised. In fact, not many financial institutions even offer them anymore. Why? It’s not that there isn’t a need to borrow money, but rather charge cards have seemed to taken their place over the years. Some banks still offer them, but the drawback is that the interest rates are usually very high (above 10%) and they are only willing to lend very small amounts.

Credit Cards
This is definitely the most flexible options, but isn’t necessarily the best for every situation. However if you only need to borrow a few thousand and you have a good FICO score, then these are probably your best bet.

The primary advantage is that you’re allowed to transfer your balance to another card anytime you want. A lot of people will scope out credit card reviews to find the best 0% balance transfer offer. They will carry their balance at 0% and before the offer expires, they will transfer it to a different credit card that has a 0% promotion. This technique is a great way to save money, but for some people, it only encourages them to spend more (since they’re paying little to no interest). So if you’re thinking about trying this, make sure you think it through. Do you have the discipline to pay off your balance in a set amount of time? If not, this may be a dangerous game to play.

Which Option Is Best?
Between the two we discussed, charge cards are typically the best option for most, simply due to their flexibility. But if you are a homeowner, then it may make sense to do a home equity line of credit. This is a loan against the value of your home. The benefits are that you can borrow a higher amount, and because it’s collateralized, the interest rate is typically less than a credit card.