Personal Loan vs. Credit Card – What Is Better to Choose in 2020

One must admit that loans have become commonplace in our lives. With it, we’re granted temporary access to borrowed money. So, with loans we can afford what is desired or necessary for us in spite of our own financial situation.

Now you can easily borrow funds from your bank or in credit agencies that provide 24/7 loans. But before taking a loan, we must decide which is more convenient for us: a personal loan or a credit card.

At first glance, all types of loans are very similar because with all of them, even with logbook loans, you can easily borrow the required funds and repay them. It can be done within a fixed time, either in fixed installments known as EMIs or monthly bills respectively. However, between them, there are a lot of differences. In this article, you can explore the definitions and differences along with some pros and cons of both. All this information can potentially help to decide which one is better to choose in 2020.

Personal Loans

Personal loans are fixed loans which you repay in equal installments for a predetermined period of time. 


  • in some situations, we need a substantial amount of money to buy a car, a house or other large purchases. And personal loans are the best for it.
  • most personal loans come in terms of three or five years, but you can find some with terms as short as one year or as long as ten years. After that, you’ll make fixed monthly payments for the agreed-upon term (number of months). For example, if you have good credit, you can find personal loans for up to $100,000 and you will have more than 15 months to pay it off.
  • reputable lenders will not charge a pre-payment penalty, meaning you can pay off your loan in full at any time to save money on interest.
  • thanks to modern technology, you can apply for a personal loan entirely online. You’ll need to provide your personal and employment information on an online credit application. Within one or two business days your bank will let you know if you’re approved to take a loan.


  1. one of the worse cons of some personal loans is that they may charge an origination fee of between 1 and 5 percent of the loan amount. This is a one-time fee that is paid in cash or from your loan proceeds at the time of closing. So, you need to ask about the fee and take it into account when comparing interest rates.

Read more about the benefits you’ll get using payday loans

Credit Cards

Unlike a personal loan, which is a fixed one, a credit card is a line of credit from which you can borrow money at any time, up to your credit limit. 


  • credit cards are very useful if you want to buy something right now in-store or online because you have continued access to credit.
  • the main advantage of credit cards is its interest-free credit period. Generally, it continues up to 45 days. Also, there are top quality credit cards. They can include 0% introductory interest periods, balance transfer availability, and rewards.


  • it usually varies from $1000 to $5000 and it often must be paid off no longer than within a year.
  • we cannot ignore the fact that each type of credit card has its own way of accumulating interest. Credit cards differ from personal loans where your monthly payment is usually the same over the entire repayment period. Unfortunately, a credit card bill can vary each month. And it is the main disadvantage of credit cards.
  • the other negative side of credit cards is that you can always charge more at any time up to your credit limit. This option can keep you stuck in debt as long as your credit card will be used.


From these facts, one may conclude that the choice of the right loan depends on our needs. If we want to make a big purchase, need to pay for the wedding, have a wish to change something in our home or to take a trip – a personal loan is the best decision. But speaking about goods, which we need to buy on the spot, it is better to choose a credit card.   

But most of all you should remember that before applying for any loan you need to carefully read the conditions of the lender. And it’s also important to compare the conditions that lending agencies and banks provide. This will certainly help you make a better decision in 2020.

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