Personal Loans vs. Credit Cards

When it comes to borrowing money, two of the most common options are personal loans and credit cards. Each has its advantages and drawbacks, and the right choice depends on your financial needs and goals. Let’s compare interest rates, repayment terms, and benefits to help you make an informed decision.

Interest Rates

• Personal Loans typically offer lower interest rates, especially for borrowers with good credit. Rates are fixed, meaning your payments remain the same throughout the loan term.
• Credit Cards tend to have higher interest rates, especially if you carry a balance. However, promotional 0% APR periods can be beneficial for short-term borrowing.

Repayment Terms

• Personal Loans have structured repayment schedules, usually ranging from 12 to 60 months. This helps with budgeting and ensures the loan is paid off within a set timeframe.
• Credit Cards offer flexible payments, but only paying the minimum can lead to long-term debt and high interest costs.

Benefits

Personal Loans:
Lower interest rates.
Fixed repayment terms.
Ideal for consolidating debt or financing large purchases.

Credit Cards:
Convenience and flexibility for everyday spending.
Rewards, cashback, and perks like travel insurance.
Useful for short-term borrowing with promotional interest rates.

Which One is Right for You?

• Choose a personal loan if you need to consolidate debt, finance a large expense, or prefer predictable payments.
• Opt for a credit card if you need flexibility, plan to pay off your balance quickly, or want to take advantage of rewards and perks.

At MCU, we offer both options with competitive rates and member-friendly terms. Visit our Personal Lending Center to find the best borrowing solution for your needs!