Comparison Between Credit Cards and Installment-Based Consumer Loans: Which Financial Solution Should You Choose?

Selecting between a credit card and an installment-based consumer loan depends on various factors such as your financial objectives, income level, and repayment capability. The following analysis will help you evaluate both financial solutions and determine the most appropriate option for your individual needs.

THE FIRST Credit Card – A Flexible Spending Solution

Advantages:

• Enjoy up to forty-five days of interest-free grace period on purchases, provided that the outstanding balance is fully repaid by the due date.
• Access zero percent interest installment plans at a wide network of affiliated partner merchants.
• Accumulate reward points equivalent to zero-point five percent of the value of each transaction.
• Benefit from a competitive cash advance fee of two percent, with the ability to withdraw up to one hundred percent of the approved credit limit.
• Cash withdrawal is available at VP Bank branches using a virtual credit card.
• Full control and monitoring of the credit card are available through the iShinhan mobile application.

Points for Consideration:

• Interest rates may be significantly high, ranging from twenty-five to thirty percent per annum if the outstanding balance is not fully paid on time.
• The credit limit is typically equivalent to two to three times the applicant’s monthly income.
• This option may not be suitable for individuals requiring immediate access to a large sum of cash.

Most Suitable For:

• Individuals with stable and verifiable income who seek flexible, everyday spending solutions.
• Customers who frequently engage in cashless transactions and possess strong financial discipline to repay on time.

Installment-Based Consumer Loan – A Practical Solution for Larger Financial Needs

Advantages:

• Borrowing limit of up to three hundred million Vietnamese Dong, with no collateral or asset security required.
• Disbursement is typically completed within forty-eight hours after loan approval.
• Interest is calculated based on the reducing balance method, with effective interest rates starting from eighteen percent per annum for customers with strong credit profiles.
• Loan tenure options are flexible, extending up to thirty-six months depending on repayment capacity.
• Simple documentation is required, including a valid national identification card and proof of income such as salary statements or employment contracts.

Points for Consideration:

• Installment-based consumer loans do not offer rewards, cashback, or loyalty benefits typically associated with credit cards.
• The documentation and verification process may take slightly longer compared to applying for a credit card.
• Monthly installment amounts are fixed and less flexible to adjust once the repayment schedule has commenced.

Most Suitable For:

• Individuals seeking a lump sum of funding for specific purposes such as home improvements, education expenses, medical treatments, or large consumer purchases.
• Borrowers who prefer structured repayment plans with fixed monthly commitments over a defined loan term.

Comparative Overview

Optimal Financial Decision Based on Personal Needs

• You should consider applying for a credit card if you engage in frequent small-scale transactions, aim to benefit from promotional offers and rewards, and are confident in your ability to repay the outstanding balance in full each billing cycle to avoid incurring interest.

• You should consider opting for an installment-based consumer loan if you require a substantial amount of funding for a clearly defined purpose, and you prefer to repay through fixed monthly installments over an extended period with a predetermined schedule.

Should you need further advice or wish to explore a suitable financial product, please contact Shinhan Finance. Our dedicated team of financial consultants is always available to provide personalized support, ensuring you receive timely access to secure and reliable financial solutions.

Shinhan Finance