When you’re facing a big expense — like home repairs, medical bills, or a dream vacation — you might wonder: Should I use a personal loan or a credit card?
Both options have pros and cons. The best choice depends on your financial situation and how you plan to repay the debt.

Here’s a simple guide to help you decide.

When a Personal Loan Makes More Sense

A personal loan is a lump sum of money you borrow and repay in fixed monthly payments over a set period. Personal loans usually come with lower interest rates compared to credit cards, especially if you have good credit.

Use a personal loan if:

• You need a large amount of money (usually $5,000+).
• You want predictable, fixed monthly payments.
• You need more time (12 to 60 months) to pay it off.
• You want to consolidate high-interest debts into one lower monthly payment.

Example:
Sarah needed $10,000 for a home renovation. A personal loan gave her a 7% interest rate and a 3-year repayment plan, much cheaper than her 20% APR credit card.

When a Credit Card Is the Better Option

Credit cards offer flexibility, and sometimes even 0% introductory APR offers, meaning you pay no interest for a promotional period (typically 12–18 months). Plus, you can earn rewards points, cash back, or travel perks.

Use a credit card if:

• The expense is smaller (under $5,000).
• You can pay it off quickly (ideally within the 0% APR period).
• You want to earn rewards for your spending.
• You already have a 0% intro APR offer available.

Example:
Mike needed to cover a $2,000 dental bill. He used his credit card with a 0% APR offer for 15 months, planning to pay it off before interest kicks in.

Decision-Making Checklist

Before choosing, ask yourself:

• How much do I need to borrow?
  Large amounts usually favor personal loans.
• How fast can I repay it?
  If within a few months, a 0% APR credit card could be perfect.
• What’s the interest rate?
  Compare personal loan rates with your credit card’s APR.
• Do I need fixed payments?
  A personal loan offers more structure, helping you stay on track.
• Am I eligible for a 0% intro APR card?
  If yes, it might save you hundreds in interest.

Final Thoughts

Both personal loans and credit cards can be smart ways to manage big expenses — when used correctly.
If you need a structured plan with lower long-term costs, a personal loan might be the better option.
If you can pay the balance off quickly and take advantage of a 0% APR or rewards program, a credit card could save you money.

Always compare your options carefully before making a decision. The right choice can help you avoid unnecessary debt and keep your finances strong.

Consumer Financial Protection Bureau (CFPB) – Managing Credit and Loans
👉 https://www.consumerfinance.gov/consumer-tools/credit-cards/