Personal Loans vs. Credit Cards: Which is Right for You?

Published On:
July 27, 2022

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Two commonly used products to help fund purchases or pay down debt, personal loans and credit cards can both be great options depending on your financial situation and goals. Each loan has features that could be beneficial; continue reading to learn about the difference between personal loans and credit cards, when it’s best to use each, and how to get started.


Personal Loans

A personal loan is considered an installment loan, meaning you borrow a fixed sum of money and promise to pay it back, and some interest, with monthly payments over the life of the loan. As an installment loan, the borrower pays a fixed amount until the full amount borrowed is repaid. These types of loans typically come with lower interest rates and steady payments which can help you stay within your budget and on track with your financial goals.

Personal loans are a good option when you know exactly how much money you need and are best for large, one-off purchases such as home improvement projects, consolidating debt, or car expenses.


Credit Cards

A credit card is a revolving line of credit, so you may borrow as you need and make payments based on the outstanding balance each month. This type of loan is better suited for more frequent purchases that you can pay off quicker than a personal loan. Some cards offer rewards, like Arbor’s Visa Rewards Card which earns:

  • 3X Points on restaurants and travel
  • 2X Points on groceries and gas
  • 1X Points on everything else

Rewards can be redeemed for cash back, gift cards, merchandise, travel rewards, and more! Plus, Arbor’s low rates can help you save money and come with great benefits.

Credit cards can help fund emergency expenses and more, such as new appliances, event tickets, online purchases, or tires for the car. Based on your spending habits, if you pay the balance in full each month, you may not owe interest.


How to Decide

When it’s time to decide between loans, check your credit score. Lenders typically determine whether you qualify for a loan based on your financial history or creditworthiness. Typically, the higher your credit score, the more qualified you’ll be for a loan, giving you more options and terms to choose from.

 Once you’re ready to apply or would like to discuss more options, you can visit any Arbor Financial branch, call our loan center at 269.488.5945, or apply online on our website.


*Rates are variable. Qualification is based on an assessment of individual creditworthiness and our underwriting standards. All Credit Union loan programs, rates, terms and conditions are subject to change at any time without notice. Not all applicants will qualify. 

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