Credit Card or Personal Loan: Which is the More Reliable Option?

Credit Card

Both a credit card and a personal loan have their advantages and disadvantages. In this article, understand their pros and cons better and assess your financial situation before using any of them!

When Should You Use a Credit Card?

If you live in a country like Singapore, you will have so many choices of credit cards offering different incentives, bonuses, and perks just so that you will use them all the time.

You can use your credit card for your everyday shopping, your online transactions, your bills payments, your contactless payments, your travel expenses, and even for depositing your hospital expenses.

It saves you the hassle of withdrawing money from the bank or the ATM every time you need to buy or pay for something.

You can also make an easy and quick cash advance when you’re running low on cash.

A credit card can come in very handy during emergency financial situations, like paying for hotel accommodations or rebooking plane tickets because you couldn’t make it to your flight on time. 

Instead of paying hundreds of dollars in cash to rebook your tickets and pay for accommodation, your credit card can help cover the costs right then and there with the option to pay for it at a later time.

However, credit cards are also like a double-edged sword that can save you from a cash emergency today but give you a lot of financial stress in the future, especially if you fail to make your payments on time. 

When Should You Use a Personal Loan?

Unlike credit cards, which you can use for everyday expenses, a personal loan from SmartLoan money lender directory is a more suitable option when you need to borrow a larger amount.

Whether it’s to fund a home renovation, a relocation, a medical emergency, your children’s education expenses, or an unexpected family situation, a personal loan is better for major expenses that you can pay for a longer period.

If you’re planning on getting a credit card or a personal loan, here are some things that you need to consider:

The Time to Get It Approved

Getting a credit card will be so much quicker compared to having your personal loan approved. There are also fewer documents required when applying for a credit card.

Your Credit Score

If you have the habit of paying your credit card bills past the due date, your credit score will be greatly affected. The same can be said when you spend over your credit limit and don’t settle your bills on time.

Personal loans have a lesser impact on your credit score because of fixed repayments and lower interest rates.

Rewards and Benefits

When you pay your credit card in full and on time, you get to enjoy cash back promos, special offers, additional discounts, travel miles, and so much more.

Personal loans from moneylender don’t have the same kinds of perks, but you can enjoy lower interest rates as well.

The Ease and Convenience

When you have a credit card, you enjoy the ease and convenience of paying for everything without carrying a huge amount of cash with you all the time.

You can use it locally and internationally, too. You can even shop for big-ticket items with interest-free installment plans.

Personal loans, on the other hand, are the better option for when you need a lump sum.

For instance, a personal loan can help you with your home renovation or with your wedding preparations. You can repay this loan for up to 18 to 24 months.


Consider what the pre-closure terms are when it comes to your personal loan. Most financial institutions charge a penalty fee for pre-closing a term loan.

But with credit cards, you can choose to pay a larger amount to free up and fund your credit limit in advance.

When Shopping for a Credit Card or a Personal Loan:

Know why you’re borrowing. 

If you need a big amount for a purchase or to cover an expense, a personal loan is the best option. 

If you need a steady line of credit for everyday purchases or expenses, you should go for a credit card.

Determine how much you’re borrowing.

Personal loans offer a higher amount that you can borrow compared to credit cards, which only offer a loan amount equal to your credit limit.

Figure out how you’re going to pay for the loan.

If you like a structured payment schedule, a personal loan is worth considering. But if you want a credit line and are confident that you will settle your payments on time, a credit card is a perfect choice.

Some Final Thoughts…

A credit card is perfect when making small purchases and when you know you can pay for everything in a short period.

A personal loan is the better option when you’re keen on buying a bigger or more expensive purchase for a longer and fixed period. Remember to always check moneylender reviews before applying a loan.

But whether it’s a credit card or a personal loan, always consider opportunity cost and see where you can better distribute your money so that you can still enjoy and maintain strong cash flow.