Should I get a personal loan or a credit card?

Whether you should get a personal loan or a credit card depends on how you want to use the money you borrow. Credit cards are best used for daily expenses, providing convenience, security, rewards and other benefits. Some credit cards are also good for short-term financing. If you can get a 0% APR credit card and pay off the debt before the regular interest rate kicks in, you could save a lot of money on a big purchase or balance transfer. Be careful, though, because credit cards have higher regular APRs than the average personal loan.

If you want to pay off a very large expense over a number of years, a personal loan is probably the answer because you’re likely to get a lower interest rate on a loan than a credit card, and you can be certain the loan amount will cover the bill before you accept it. Credit card limits, on the other hand, are unknown until you’re approved for the card. Also, credit cards cannot be used as a regular payment method for some types of bills, such as mortgages, student loans, and credit card bills. Money from personal loans can be used for pretty much anything. That said, many personal loan providers charge origination fees of 1%-8%, and those should factor into your decision, too.

Personal Loans vs. Credit Cards:

It’s clear that personal loans and credit cards both share a lot of similarities and have a lot of differences. As a result, it’s not too hard to see which is best to use for different types of people in some common situations.

When to Use Personal Loans vs. Credit Cards:

• If you need to borrow a lot for a long time, use a personal loan. Personal loans generally give better interest rates and let you borrow more than a credit card. Personal loans also have set payoff periods, lasting years. Plus, you can request the amount of the loan, whereas credit cards don’t allow you to ask for a certain limit. You’re still not guaranteed to get the amount requested, though.
• If you want a credit line for emergencies, use a credit card. With credit cards, you aren’t borrowing money until you use your card. If you simply want an emergency credit line that will be there when you need it – without any obligation to borrow a certain amount – credit cards are the best option.
• If you want to pay off a high-interest credit card debt, use either a personal loan or a balance transfer credit card (depending on which gives the best interest rate). Balance transfer credit cards can potentially give the best deal – 0% APR for an intro period and, in some cases, no balance transfer fee – but only if you have at least good credit. Otherwise, a personal loan will likely be the better (and cheaper) bet for paying off credit card debt.

Ultimately, however, every reason you might have for borrowing money will have a different set of circumstances. Plus, personal loans and credit cards both have variables that depend on an applicant’s creditworthiness, such as interest rates, credit limits, and fees. The differences in these variables can make either option more expensive or far cheaper than the other for certain types of transactions and people. So make sure to thoroughly consider the pros and cons of each option available to you, given your own credit standing. That’s how you choose whether a personal loan or a credit card is right for you.

It really boils down to what do you want the money for. If you're thinking just small purchases, maybe go with a credit card. Get points, rewards, etc., all fun stuff. If you need a larger lump sum, a credit card will only give you trouble, so should go for a loan.

Well, the picture's big here, and it depends on entirely on the terms you're offered and what you want to finance. In most situations, a personal loan can be a more affordable way to finance a big-ticket purchase than a credit card. It enables you to you repay the lump sum you get in equal installments, but it doesn't provide the credit building advantages a credit card does.

Also, a credit card provides a greater flexibility, since you can "borrow" money from it at any time (up to your credit limit, of course).