Life in Norway is associated with high prices. Therefore, if in a given month you earn less, lose your job, or face unexpected expenses, you may need to look for additional funds from external sources. For this reason, more people decide to take a loan from a bank. Find out now what is more profitable in Norway – consumer loan or credit card in Norway.
Consumer loan or credit card in Norway. Who is a consumer loan in Norway a good solution for?
If you are looking for a more predictable solution, you should choose a consumer loan. The money is transferred directly to your account, giving you greater control over it. You can decide what and when you want to spend it on, and you will also know how much you still have left.
With a consumer loan, you do not need to specify the purpose for which you intend to use the borrowed money. Therefore, you can freely use it to cover everyday household expenses, buy a washing machine, finance your dream holiday or renovate your home.
When signing the loan agreement, you will find out exactly what your instalments will be and what the planned repayment period is. Thanks to this, from the very beginning you will have greater control over how much you can realistically afford to repay.
Advantages of consumer loans in Norway
- You can borrow from NOK 500 up to NOK 600,000.
- Even with a high loan amount, you can spread repayment into affordable instalments over a longer period of time, making it less burdensome for your household budget.
- Consumer loans in Norway usually have significantly lower interest rates compared to credit cards.
- In Norway, there are no problems with early repayment. You can simply add an extra amount to your instalments to shorten the repayment period.
- The bank allows you to borrow money for any purpose.
Disadvantages of consumer loans in Norway
- Most banks in Norway grant consumer loans only from the age of 23.
- The required annual income when applying for a consumer loan in Norway is usually around NOK 230,000.
- Compared to a credit card, you must wait for the decision and the transfer of funds. Therefore, it is not the best solution for sudden expenses when you need immediate access to money.
- For emigrants, most banks apply a rule that the loan is granted to people who have lived in Norway for 3 years and have permanent employment.
When is it better to choose a credit card in Norway?
Now let us analyse who and when benefits most from a credit card in Norway. It is certainly a good choice if you have a stable job and shortly before payday you run out of money for an unexpected expense, such as a doctor’s visit or car repair. Thanks to the credit limit on your card, you can cover the expense without any additional formalities.
It is worth remembering that if you settle the debt quickly, for example right after receiving your salary, you will not incur any costs.
However, if you are not able to repay the borrowed amount during the interest-free period, you must take into account significant charges. Interest rates on credit cards in Norway increasingly reach 20–30%. Therefore, repaying such an obligation may become difficult. With credit cards, it is much easier to fall into financial trouble.
Advantages of credit cards
- Immediate access to the credit limit, often without formalities.
- If you repay on time, you do not have to worry about additional costs.
- Credit cards are often available from the age of 20.
- They work very well in the case of sudden expenses.
- Many shopping discounts are available when paying with a credit card.
Disadvantages of credit cards in Norway
- It is very easy to lose control over your spending.
- If you do not repay within the interest-free period, you must expect very high costs. Interest may reach even 20–30%.
- The available amounts are usually lower than in the case of a consumer loan and often depend on income.
- Interestingly, many banks allow you to obtain a credit card limit even without stable income. Compared to a consumer loan, it is definitely easier to obtain.
If you would like more information, contact Motty advisors.
