What should you do if you need money urgently? Find out which option is right: a personal loan, a credit card, or an overdraft.

There are times in life when you need money urgently. In such situations, people have limited options for getting money quickly.

 

 

 

Emergency money options: There are times in life when you need money urgently. The sudden need for money in an emergency can make people feel trapped. In such a situation, they have limited options for arranging immediate funds.

 

From where they can meet their immediate financial needs. These options include personal loans, credit card usage, and bank overdrafts. However, the rules for all three are different. Let's learn about these three options.

 

Personal loan options

A personal loan should be considered when you need a large lump sum. For instance, for weddings, higher education, home purchases, or medical emergencies, you can opt for a personal loan. The bank thoroughly evaluates your financial situation and CIBIL score before approving your personal loan.

 

You pay a fixed amount to the bank every month, including interest. If you're employed, a personal loan may be the right option for you, as the EMI amount is determined by your salary. 

Bank overdraft facility

A bank overdraft is a special banking facility offered to the bank's most trustworthy and responsible customers. Under this facility, the bank allows you to withdraw more money than you have in your savings or current account. However, the bank charges interest for this facility. 

For example, if you have ₹50,000 in your bank account and your bank has granted you an overdraft limit of ₹20,000, you can withdraw ₹70,000 from your bank. Bank overdrafts should be used by people who need money for a short period of time and can repay the amount within a stipulated time frame. 

 

Use of a credit card

Using a credit card, you can make purchases immediately and pay for them the following month. Each credit card has a limit, allowing you to make purchases or pay bills accordingly. If you earn a fixed salary and know how much you can pay, you can pay off your credit card balance the following month.

 

In this situation, you should consider using a credit card. If your financial situation is not stable, you should avoid using credit cards. Failure to make timely payments can result in significant interest charges. However, you should consult your financial advisor before making any decisions.