Skip to main content

The Differences Between Personal Loans and Credit Cards

*Catherine Alford is a sponsored partner compensated by OneMain.

Family-finance expert and sponsored partner Catherine Alford looks at the differences between personal loans and credit cards, and which may be a better option for your situation. Here are some things to consider:

See video transcript...


If you need to borrow money, you might be wondering the best way to do so.

And, if you don't want to borrow money from family or friends, some of the most common options are getting a personal loan or using a credit card.

There are pros and cons to both though, so let me help you understand the differences between the two.

Credit cards

Credit cards may have interest rates anywhere from 15% to 20% and a set limit on the amount you can borrow.

Sometimes credit cards have lower introductory rates that go up after the first year of use.

Credit cards are also incredibly convenient, and sometimes have benefits like airline miles and even access to museums and concerts. When I use credit cards, I tend to use cards that earn airline miles to help pay for future family trips.

The catch is that earning benefits like this is only worth it if you pay off your credit card balance in full at the end of each month.

If you need a more long-term financing option, you might want to consider a personal loan.

Personal Loans

Personal loan interest rates may range from 5% to 36% depending on your credit score.

And the interest rate is typically set for the duration of your loan and won't change.

If you're approved for a personal loan, you'll get a lump sum deposited in your bank account. Then, you will pay back the personal loan in set monthly installments for a specific period of time.

A personal loan can be beneficial for someone who wants to consolidate and pay off higher interest debt with one monthly payment that doesn't fluctuate.

Hopefully this helps you choose which option would be best for you and your specific situation if you need to borrow money in the future.


This video was posted July 8, 2019. For more sponsored videos, visit our YouTube channel.


The information in this article is provided for general education and informational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness or fitness for any particular purpose. It is not intended to be and does not constitute financial, legal or any other advice specific to you the user or anyone else. The companies and individuals (other than OneMain Financial’s sponsored partners) referred to in this message are not sponsors of, do not endorse, and are not otherwise affiliated with OneMain Financial.