Quick answer
A personal loan gives you a lump sum with fixed payments and an end date. A credit card is revolving credit with a variable balance and minimum payments. The Federal Reserve's recent data showed an average of 11.90% on 24-month personal loans and 22.36% on card accounts assessed interest.
Both let you borrow. The structure decides how much you pay and how long you are in debt.
Side by side
| Personal loan | Credit card | |
|---|---|---|
| Type | Installment | Revolving |
| Payment | Fixed monthly | Minimum that changes with the balance |
| End date | Set term | None, until you pay it off |
| Average rate (Federal Reserve) | 11.90% on 24-month loans | 22.36% on accounts assessed interest |
| Interest-free option | No | Yes, with a grace period if you pay in full |
| Common fees | Origination fee | Annual, late and cash advance fees |
Worked example: paying off $5,000
| Option | Payment | Time | Interest |
|---|---|---|---|
| Personal loan at 15.99% APR | $175.76 | 36 months | about $1,327 |
| Card at 22.36% APR, same payment | $175.76 | 41 months | about $2,190 |
Arithmetic illustration, not an offer.
Which to use
- Card: everyday purchases you pay in full each month.
- Personal loan: a larger expense or existing card debt you need months to repay.
Compare the numbers with the debt consolidation calculator, or read balance transfer vs personal loan.
Want to compare real offers? Use the form on this page to see whether partner lenders may have an installment loan for you, with APRs on our network from 5.99% to 35.99%, or call (800) 236-7761.
Examples are illustrations, not offers. Approval, APR and terms depend on the lender, your state and your credit profile.
Frequently asked questions about personal loan vs credit card: which costs less?
Is a personal loan cheaper than a credit card?
Often, for balances you carry over months. Federal Reserve data has shown lower average rates on personal loans than on cards assessed interest. A card can cost nothing if you pay in full during the grace period.
Should I use a personal loan to pay off credit cards?
It can lower your rate and give you an end date, if you get a lower APR and stop adding to the cards.
Which is better for my credit score?
Moving card balances to an installment loan can lower your revolving utilization. Both help if you pay on time.
When is a credit card the better choice?
For purchases you can pay off in full by the due date, or short-term 0% offers you can clear before the intro rate ends.
Sources
- Federal Reserve G.19 Consumer Credit (interest rates) (accessed 2026-10-09)
- CFPB: What is a grace period for a credit card? (accessed 2026-10-09)
- CFPB: How does my credit card company calculate the amount of interest I owe? (accessed 2026-10-09)
- CFPB: Do personal installment loans have fees? (accessed 2026-10-09)
Last updated 2026-10-09. How we research and update pages.