Subscribe to Our Newsletter

We know you love savings. Sign up for more!

Credit Cards VS Personal Loans. Are They The Same Thing?

BY Team Loanstreet

Updated 13 May 2024

Follow Loanstreet on Facebook & Instagram for the latest updates.

* The content and information on this article might be changed or updated periodically by Team Loanstreet without notice.

Many of us own a credit card(s) or even have a personal loan, but do we know enough about it?

This article is to help consumers find out more about credit cards and personal loans and familiarise them with the pros and cons of each in order to make wise decisions when thinking of getting a new credit card or a personal loan.


What's covered in this article?

What are the differences between a credit card and a personal loan?

Aspect Credit Cards Personal Loans
Convenience - Substitute for cash
- Usable overseas
- Convenient for online transactions
- Auto-debit for monthly bills
- Supplementary cards available
-  Higher loan amounts
- Quick availability
- Minimal documentation
- No collateral or guarantor is required
- Lump sum disbursement
Financially Beneficial - Builds credit score
- Opportunity for monthly instalments
- Financial backup
- Lower interest rates or interest
- Free periods
- Access to purchases when cash is unavailable
- Increases creditworthiness when paid on time
- Access to funds for various purposes
- Debt consolidation option
- Fixed interest rates and repayment terms
- Possible lower interest rates with auto-debit
- Option to top up the loan in the future
Rewards and Savings - Points, rewards, and discounts on purchases
- Cashback options
- Special privileges for frequent flyers
- Debt consolidation may lower overall payments
- Fixed interest rates and loan terms
- Possibly lower interest rates with auto-debit
- Option for top-up loans
Safety - 24/7 customer service
- Zero liability for fraudulent transactions
- Security measures for online purchases
- Direct wire transfer to the bank account
- Cashless transactions minimise the risk of loss
Cons - High interest rates on overdue bills
- High fees
- Risk of overspending
- Vulnerability to fraud
- Higher interest rates compared to secured loans
- Lock-in periods and penalties for prepayment
- Potential for unnecessary excess payments

Can you tell the difference now?

Credit cards are often more suitable for smaller amounts and everyday use. Personal loans offer relatively higher amounts and are a fixed-term structured product.

In conclusion, credit cards and personal loans have different uses and various pros and cons. To decide on what’s best for you, you should think about the goal you want to achieve by getting a credit card or personal loan.


*The above article is intended for informational purposes only. Loanstreet accepts no responsibility for loss that may arise from reliance on information contained in the articles.



Continue reading...

About the Author

Team Loanstreet

Run by a professional human-sized team, get resourceful tips & guides from our very own library of financial articles that can help improve your financial lifestyle & make a well-informed money decision. We strive to provide you with the best service in helping you to get the most out of that DUIT!


Suggested Articles

Budi Madani: Get a Subsidy of RM 200/Month for Diesel

Budi Madani: Get a Subsidy of RM 200/Month for Diesel

 EPF Akaun Fleksibel (Account 3): How to Transfer and Withdraw

EPF Akaun Fleksibel (Account 3): How to Transfer and Withdraw

Buying a House? Here's 2024 Stamp Duty Charges & Other Costs Involved

Buying a House? Here's 2024 Stamp Duty Charges & Other Costs Involved