Sometimes, life throws a curveball that your wallet just isn’t ready for. Maybe your fridge breaks down, your car refuses to start, or you’ve run out of cash before month-end. When you need money quickly, having the right credit option at your fingertips can make all the difference.

There are 3 forms of short- to medium-term credit that can help you cope with unexpected shortfalls, each designed for a specific financial need. Let’s unpack them so you know exactly which solution will work best for you.

Overdrafts: Smoothing your cash flow

We’ve all been there – payday is just around the corner, but the bills won’t wait. An overdraft gives you breathing room when you need it. It’s a credit facility that’s linked to your current account and enables you to access extra funds when your balance runs low.

There are 2 major benefits to applying for an overdraft facility on your account:

• It’s always available Once your overdraft has been approved, you can use it whenever you need it, up to your overdraft limit.
• You pay interest only on the amount you use Unlike a personal loan, where money is paid into your account and you start paying interest immediately, you’ll pay interest only when you use your overdraft, and only on the amount that you use.

Overdrafts are ideal for short-term cash flow issues, like covering groceries, school supplies, or smaller surprise expenses. Use your overdraft sparingly and pay it off in full every month to keep interest costs down.

Credit cards: Everyday convenience with rewards

Think of a credit card as your one-stop shop – for online and in-store payments – but not as a non-stop shop. When used properly, a credit card offers a lot of benefits, and if you’re smart, you can avoid paying interest.

Here are some of the advantages a credit card offers:

• It’s always available Provided you stay within your credit limit, you can use a credit card to shop online, for everyday in-store shopping, and to create virtual cards linked to your devices. It’s especially handy whenever it would be inconvenient to draw cash – for example, grabbing a coffee on your way to work, or paying toll fees.
  
  
• It’s safer than cash Depending on your limit, a credit card can also be used to buy more expensive items, like appliances and flight tickets – so you’re spared the risk of carrying large sums of cash with you. When cash is not an option, as with online shopping, a credit card is a handy solution.
  
  
• You can earn rewards on every swipe Credit card providers usually offer reward programmes. Link your Nedbank credit card to Greenbacks, and you’ll earn Greenbacks on qualifying credit card spending. You can redeem Greenbacks in several ways, including shopping, travel, or withdrawing them as cash.
  
  
• Interest-free period Most credit cards give you a 30-day grace period from the monthly statement date, and if you pay off the full balance within that period, you aren’t charged interest. This could include items bought several weeks before the statement date – which means you can enjoy up to 55 days of interest-free credit on your credit card, if you time your purchases and your payments carefully.

A credit card is a convenient way to handle everyday expenses and earn rewards, provided you’re careful to spend only what you can afford to pay back every month. Used responsibly, a credit card account could even improve your credit score.

Personal loans: For big, one-time costs

Imagine an unexpected vet’s bill, or damage to your home that isn’t covered by insurance, or your child discovering an amazing new talent that you can’t afford to support and develop – there are many urgent expenses that can crop up when you don’t have the savings to cover them. You might need to save your family from a financial disaster, or you might simply want to renovate your home, or secure a better education for you or your loved ones. Provided it’s affordable, a personal loan can help you achieve all kinds of goals.

A personal loan gives you a lump sum upfront and you pay it back in fixed monthly instalments over a set period. It offers its own unique benefits:

• Predictable repayments You’ll know exactly how much you are going to have to pay back every month, and for how long. This allows you to budget for future expenses with your repayments in mind.
• Larger loan amounts Nedbank offers personal loans of up to R400,000, which makes a personal loan suitable for big-ticket expenses like medical procedures, home repairs, or even a consolidation loan to replace all your existing debt with 1 monthly payment.
• Tailored rates Nedbank personalises your interest rate according to your credit profile.
• R200 cashback If you take out a Nedbank Personal Loan and open a MiGoals Plus or MiGoals Premium account, arrange to have your salary paid into that account, and authorise a DebiCheck debit order to make your loan payments from that account, Nedbank will pay you R200 cashback every month for the duration of your loan – so you could get up to R14,400 cashback in total. Terms and conditions apply.

A personal loan is an option to consider if you need a significant amount of money upfront and prefer the structure of fixed repayments.

Which solution is right for you?

The right credit solution for you depends on your personal circumstances, but having credit options can prevent a financial emergency from turning into a crisis. Contact our money experts to explore your options.