text: Credit Card vs Personal Loan: Which One Should I Get? - Make Lemonade
  HomeBlogCredit CardsCredit Card vs. Personal Loan: Which One Should I Get?
  One popular question that is asked often is " Credit card vs Personal Loan: Which one should I get?" The decision to choose a credit card vs. a personal loan should be easy, and here's how to simplify your decision.
  If you are using a credit card to earn cash back or to earn travel rewards, for example, credit cards can be a great tool to get rewards. Similarly, you can use 0% APR credit cards to transfer credit card balances. If you are using a credit card for financing, then credit cards can be expensive because they often carry a double-digit interest rate.
  When you have a credit card, you will receive a credit card statement each month. You are expected to pay the minimum payment, which is equal to about 1-3% of the payment due. When you spend money on a credit card, you have to pay back the full total each month that you spend. If you don't, then you will owe interest. Interest accrues on your credit card balance based on the average daily balance during the month (not based on the balance at the end of the month).
  Since credit cards have high interest rates, credit cards are best for short-term financing. You should pay off credit card debt each month to avoid interest charges and penalties.
  Credit cards are best to earn rewards such as cash back, travel rewards and hotel rewards. Credit cards are also popular for 0 APR so you can transfer credit card balances without owing any interest.
  Depending on your credit profile, you may be able to qualify for a low personal loan interest rate and save money compared to a credit card. The interest rate on your personal loan will depend on several factors, which may include your credit score, credit history, and debt-to-income ratio.
  Personal loans are best for larger purchases such as medical expenses, home renovations, major life expenses, or major life events such as an engagement ring, wedding or honeymoon that will take you more than a year to repay. A personal loan is also an excellent tool for credit card consolidation.
  Personal loans do have an origination fee typically of 1-5% (whereas credit cards do not). An origination fee is a one-time fee that is paid in cash or from your personal loan proceeds. If you are paying off credit card debt, a personal loan can be a great tool because the interest rate on a personal loan often is lower than the interest rate on a credit card. Therefore, you can save money by borrowing a personal loan to pay off credit card debt. You can also increase your credit score when you borrow a personal loan to consolidate credit card debt because you will switch from revolving debt (a credit card) to installment debt (personal loan). This will help improve your credit utilization ratio, which is a factor used to compute your credit score. Since a personal loan does use credit utilization like a revolving debt credit card does, your credit score can improve.
  You can use a personal loan or credit card to consolidate credit card debt. However, they take two different approaches.
  If you think you will pay off your credit debt within 12-24 months, you could get a 0% APR credit card and transfer your balance to this credit card. So long as your repay your balance in full before the end of the introductory period, you will not owe any interest. Therefore, a 0 APR card is a smart way to save money and defer on interest.
  If you think you will need more time to pay off credit card debt, you are better off getting a personal loan to consolidate credit card debt. This credit card consolidation calculator shows you how much money you can save through credit card consolidation with a personal loan. When you consolidate credit card debt, make sure that the interest rate on your personal loan or credit card consolidation loan is lower than the interest rate on your credit card.