Personal Loans
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LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.

Personal Loan vs. Credit Card: How They Compare

Headshot of Lauren Nicholson
Written by
Lauren Nicholson
Headshot of Amanda Push
Edited by
Amanda Push
Updated on:
Content was accurate at the time of publication.

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Key takeaways

  • Loans come in one-time payments via direct deposit.
  • You can use your credit card to borrow and repay money repeatedly.
  • Loans and credit cards charge interest, but you won’t pay interest on your credit card if you pay your entire balance every month.

You can use a personal loan or credit card to borrow money instead of paying with money you already have in the bank.

Personal loans

When you take out a personal loan, the lender will send you a one-time payment via direct deposit or check.

You’ll pay that money back in equal monthly payments over a set period of time, typically two to seven years.

You can’t borrow more money from the same loan. You’ll need to take out a second loan or find another way to borrow money if you run out.

Check out the best personal loans.

Credit cards

When you get a credit card, you’ll have access to a certain amount of money you can borrow and repay over and over again.

Your monthly payments will be different every month because credit cards have rates that change with the market.

You can make minimum payments or pay off your entire balance. If you pay off your balance every month, you won’t pay interest — essentially borrowing money for free.

Check out the best credit cards.

Personal loansCredit cards
Annual percentage rates (APRs) (interest rate plus fees)5.99%-35.99%, fixed (as of publication)24.72% on average, variable (as of publication)
FeesOrigination fee, late/dishonored payment fee, prepayment penaltyAnnual fee, late payment fee, foreign transaction fee, balance transfer fee and more
Amount$1,000-$100,000Up to $10,000
Getting your moneyDirect deposit into your bank account or personal checkSwipe or tap card to use money for purchases
RepaymentRegular monthly payments of the same amountMinimum monthly payments to payment of entire account balance
Time in debtTypically two to seven yearsNone if you pay off balance every month up to years if you only pay the minimum

The numbers in the table above are typical of the average loan or credit card, but there are exceptions to almost every rule. For instance, payday loans charge rates in the triple digits — well above the 36% limit that traditional lenders follow.

Consider a loan if…Consider a credit card if…
  • You want to know when you’ll be debt-free. Loans come with set repayment terms, typically from two to seven years.
  • You want consistent, predictable payments. Your loan payments will be the same amount every month as long as you don’t miss payments.
  • You’re worried about your spending habits. Credit cards give you ongoing access to money, and it’s easy to tap or swipe without thinking through the consequences. You’ll need to apply for more money if you use up your personal loan.
  • You want lower interest rates. The average APR on a new credit card offer is 24.72%, while the average APR for a personal loan with excellent credit is 18.68%.
  • You need a lot of money up front. Credit cards typically limit purchases to $10,000 or less. You can borrow up to $100,000 with a personal loan. Lenders like BHG Financial offer even more.
  • You can pay off your charge quickly and don’t want to pay interest. You won’t spend a cent on interest if you pay off your debt before your monthly payment is due. If you have excellent credit, you may qualify for a 0% APR credit card that gives you up to 21 months to pay off a purchase interest-free.
  • You need small monthly payments. You can pay the minimum on your credit card — typically a small percentage of your balance — and still be current on your account. This is a bad financial choice in the long run, since you could end up paying more than double the amount you borrow in interest.
  • You need to cover small ongoing expenses. Since credit cards allow you to borrow money and pay it off over and over again, they’re ideal for small recurring bills. Plus, you can set up autopay so you’re never late on a bill payment.
  • You’re not sure how much you need. Once you take out a loan, you can’t borrow more. Credit cards allow you to borrow up to your credit limit.

  Credit cards

Credit cards are convenient — chances are you already have one in your wallet that you can use right away (assuming you haven’t hit your credit limit). If you’re applying for a new card, you can typically expect it to arrive in the mail within 10 to 14 days

  Need money now?

Some credit card companies offer instant approval and instant card numbers to give you quick access to your money.

  Personal loans

Lenders typically take one to 10 business days to give you your loan money. You can speed up the process by gathering documents like W-2s, identification and your mortgage or rental agreement ahead of time.

  Need money now?

Some lenders specialize in offering quick loans that can get you your money as soon as today.

Lenders and credit card companies typically review your credit score, credit report and income before offering you a loan or credit card.

You’ll need a good to excellent credit score (670-850) to qualify for the most popular travel rewards credit cards and the best personal loans.

You can get loans for bad credit and credit cards for bad credit, but you’ll typically pay higher interest rates and fees. This makes borrowing money more expensive.

Improve your score


Learn about how to improve your credit fast. Boosting your score will help you save money. Raising your score from fair to very good could save you more than $22,000 across credit cards, personal loans, mortgages and auto loans.

Estimate your personal loan payments

Estimate your credit card payments

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Personal Loans Resources

Personal Loan Rates
Personal Loan Calculator
Best Personal Loans for Bad Credit
How to Refinance a Personal Loan

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