Personal Loan vs. Credit Card
Understand the structural differences between an installment loan and revolving credit when comparing borrowing costs.
A personal loan and a credit card are different types of borrowing. A personal loan is typically an installment loan with a scheduled payment and a defined term. A credit card is revolving credit, where the balance can change as you borrow and repay.
Compare the same borrowing amount
To make a useful comparison, use the same starting balance and consider how long you expect to carry it. Then compare APR, fees, required payment, and the total amount you expect to pay.
Why the monthly payment can mislead
A lower required payment does not automatically mean a lower borrowing cost. The payoff period and interest rate both matter. For a credit card, the payoff time can change depending on how much you pay each month.
Use the calculator carefully
The ClearRateUS personal-loan calculator models a fixed installment schedule. It should not be interpreted as a credit-card payoff calculator or as a guarantee that one product will always cost less.
Test your own amount, APR, down payment, and term.
Open the calculator