Required

Get A Personal Loan Or Use A Credit Card?

Written by:
AmONE
Edited by:
Kristin Marino verified

use credit card When it comes to financing a purchase, it can be tempting to reach for your credit card first to pay for it. There are times when it is beneficial to use your credit; after all, if you use it wisely, you can not only make your purchase but also grow your credit history and improve your credit score. But there are times when it’s probably better for you to get a personal loan instead of relying on plastic. But, how do you know when to use your credit card and when to apply for a personal loan online? AmONE can help. Read on to learn the benefits of personal loans vs. credit cards for making purchases.

Generally speaking, knowing when to use a credit card and when to get a loan depends on the amount of money you need to spend. Most credit cards have a set limit in terms of how much you can borrow. Unless you have great credit, your credit card company may not offer you much more than a small credit limit of anywhere from a few hundred to several thousand dollars. If you are financing a purchase worth more than that, you could run into trouble with your limited borrowing power. In addition to a low credit limit, you could also be faced with high interest rates and late fees and penalties if your purchase turns out to be more than you can financially handle.

If you’re careful with your personal finances, and have great or even excellent credit with high spending limits, then it might not be a problem for you to make a larger purchase. If you’re considering something with a larger price tag — like home improvements, a vacation, or a wedding — you may be better off taking out a personal loan.

As a personal loan is set at a fixed amount and terms, you can plan out your spending and your use of the money. You can also research your lender options and find the best loan at the lowest interest rates. This means saving money in the long term. In addition, there’s no so-called “sticker shock” when it comes time to repay your loan. Credit cards tend to surprise even the most careful shoppers with accrued interest – unless the cards are paid off in full each month, that is.

If your credit scores are in the bad or poor range, it may be easier for you to obtain a loan than to use a credit card to finance a larger purchase. There are many lenders in the market today who specialize in loans for people who don’t have the best credit. Also, there are lenders who also offer unsecured personal loans. This loan type means you don’t have to put up collateral in order to get the loan you need, so you’re not risking something you own, such as a home or a car.

When making smaller purchases that you can easily manage repayment on, credit cards can be ideal. So long as you have good financial discipline, you can pay off the balance and avoid interest payments and other fees. For financing larger purchases, a personal loan may be easier in that there are monthly payments set out in advance. These payments include both the capital and the interest on the loan, so it’s a set number you agree to and can plan for. The larger the amount of money you need to spend, the better a personal loan will be for you in the long term.

Get matched to your perfect loan and level up your money game.
Find My Loan
Popular Posts

Related Content

What’s Worse: Bad Credit or No Credit?
Credit | September 15, 2022
No credit means you don't have a credit report, but bad credit means you've made some mistakes and paying the price. You're better off with no credit history.
How to Improve Your Credit Score by Becoming an Authorized User
Credit | September 26, 2022
Becoming an authorized user on another person's account can help your credit score. Get the pros and cons and learn how it works.
Build and Improve Your Credit Score Fast With These Credit Report Tricks
Building Good Credit | October 18, 2022
A high credit score can save you money. Learn about the legitimate, free ways you can improve your credit score.
How to Improve Your Debt-to-Income Ratio for a Personal Loan
Credit | January 12, 2023
If you have plans to borrow money, your debt-to-income (DTI) ratio matters. Learn how lenders use it and how you can improve it.
Here’s What to Do If You Have No Credit History
Building Good Credit | February 9, 2023
A credit history is important for more than just taking out loans. Here's how to build your credit history and get a good credit score.
What Credit Score Do You Need for a Personal Loan
Credit | April 25, 2019
Gain insight into how your credit score affects your chances of obtaining a personal loan and steps to improve it. Learn the ins and outs of credit scores.

Ready to up your money game?

See my loan options
Why AmONE is Trusted By Millions for Their Loan Needs

Anyone can put together a group of lenders in a marketplace to offer people loans. We go beyond that. We not only partner with some of the best lenders around (like Citi, Rocket Loans, SoFi and so many more), we also work with partners who can help people like you go beyond a one-time loan. We connect you with the money programs you need to help you get real financial solutions in place that allow you to tackle your debt and money problems so you can move forward. Getting out from under debt to financial freedom is daunting and we're ready to help you every step of the way.

AI is the hottest thing around right now, but we know from our decades of experience in the personal finance space that the last thing someone wants to do is talk to a robot when they need real answers. Solving money problems can be stressful and daunting, so don't settle for generic responses and information that offers little real financial insights. Speak to one of our many support specialists who all work from an AmONE office right here in the U.S. and get the answers you really need to make better financial decisions.

We work hard to find loan offers for even the most challenging financial situations. With our large lender marketplace, we know we give everyone the best shot at getting the loan, debt and credit help they're hoping to find. Even when someone's credit is clearly poor or they hold a large amount of debt, we still get our customers in front of lenders to give them the best shot at securing the funds they need. When the unexpected happens and customers are rejected for loans, we still work with them to find other financial solutions that put them on the path to financial recovery so they can keep moving forward toward their money goals.

Anyone can put together a group of lenders in a marketplace to offer people loans. We go beyond that. We not only partner with some of the best lenders around (like Citi, Rocket Loans, SoFi and so many more), we also work with partners who can help people like you go beyond a one-time loan. We connect you with the money programs you need to help you get real financial solutions in place that allow you to tackle your debt and money problems so you can move forward. Getting out from under debt to financial freedom is daunting and we're ready to help you every step of the way.

handicon
Matched with Lenders Who Fit Your Needs

Tell us your situation and we will match you instantly to financial solutions that are right for you.

shieldicon
Get Offers from Only Highly Rated Providers

We work with only the highest-rated partners that provide the best chance to get you the loan you need for your situation.

supporticon
Easy Access to Live Support Based in the U.S.

Get live support when you need it most, through email or phone, and have your questions answered fast.