Should You Use Personal Loan or Credit Card for Financial Support

Compare the Pair: Personal Loans vs Credit Cards

We often need financial support to survive unexpected troubles or cover the hole in the budget. Borrowing money is a normal practice in the US, where almost half of the pollination lived in debt.

The question is, how to choose the right source of cash. It’s a matter of repayment conditions, interest rate, and the total benefit of the deal. See how to decide which of the two most common methods is suitable for you.

What is the Main Difference Between Loans and Cards?

People use these two types of funding because of their convenience and easy access. Either wealthy Americans and persons with bad credit ask themselves the question “can I take personal loans or credit cards”? Everybody can receive a card, and get approval.

Let’s discover the key peculiarities of both options.

Card Loans
revolving credit Offer you a fixed sum
Has a financial limit you can resume by repaying the debt, and no limits in time Has a final term of repayment


Variable interest depends on the debt amount and regular repayments Most commonly, imply a fixed rate
The interest may stay 0% if you clear the account each month Usually have a higher rate

However, there are plenty of common features confusing people:

  • Both are lending types that imply small sums to the borrower;
  • Both can be secured and unsecured – secured types require collateral as compensation in case of non-payment.
  • Both may be given from banks and private lenders. Usually, official institutions offer a lower rate but are really hard to obtain.

When Personal Loans are the Best Variant

This type of lending implies a lump sum of money, given for an established period. In the case of none-payment, you can only prolong the debt, increasing the interest rate. Here are the obvious advantages of a choice:

  • Available for bad credit customers. Given by private bodies, they are achievable even for people with a low score and previous debts.
  • Bigger sums. Loans were developed either for small issues and large purchases. If you plan to spend a lot at once, it’s a good option for you.
  • Flexible conditions. From mortgage to payday options, this sphere is highly developed and offers versatile conditions of repayment.

Any pitfalls? Usually, personal loans have higher rates. It is explained by their convenience and availability. The average interest nowadays is 10-28% of a given sum, add to these fees and charges. Keep these outgoing in mind while deciding.

Reasons to Use Credit Cards

Some financial experts would prevent you from using this instrument – sure, if you use it to make daily purchases or instead of cash, it will hardly improve your financial state. Buts the smart approach shows all benefits of cards:

  • lower interest. If you repay the sum without delays, the percentage may even lower to 0%. It’s a flexible factor that changes depending on your behavior.
  • available 24/7. Additional cash is always here – you don’t need to apply and wait for approval to use it.
  • Flexible amount of money. Unlike loans, they offer you a cash limit. You can take any part of it at any moment.

However, such an option suits only small needs. Use it for small issues and always control your behavior. If your salary was postponed, or you forgot cash at home, it’s a good method. If you need support for larger expenses, the card limit won’t be enough.

No matter the lending type you choose, be responsible for the debts and count your total debt – remember about fees and taxes. Before deciding the option, discover all particularities and pitfalls.

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