Personal loan vs. credit card: which is cheaper?

What's the difference in cost?

Personal loans usually carry a lower APR than credit cards — often around 12% versus 22%+ — and have a fixed term, so you know exactly when you'll be debt-free. Credit cards charge much higher interest on any balance you carry, with no set payoff date.

For carrying a balance over many months, a personal loan is almost always cheaper. For a purchase you'll pay off in full that month, a card is free.

When is a personal loan the better choice?

A personal loan wins when you're consolidating debt or financing a larger expense over time. The lower fixed rate saves interest, and the set monthly payment forces a payoff schedule instead of letting a balance linger at card rates.

Compare the real numbers in the personal loan and consolidation calculators before deciding.

When is a credit card the better choice?

A credit card wins for everyday spending you pay off in full each month — you get a grace period, rewards and zero interest. A 0% intro-APR card can also beat a loan for short-term financing if you clear the balance before the promo ends.

The danger is carrying a balance at the regular APR, where interest compounds fast.

How do I decide?

Ask whether you'll pay it off this month. If yes, use a card. If you'll carry it for months, a lower-rate personal loan usually costs far less — unless a 0% intro-APR card clears it inside the promo window.

Model both: the credit card payoff calculator shows the cost of carrying a card balance, and the personal loan calculator shows the fixed-rate alternative.

Frequently asked questions