Are you in need of money, perhaps for a home improvement project or a large purchase? Are you wondering how to best borrow the funds you need in a timely manner? Do you have some concerns about making a rash decision that you’ll regret?

These are all legitimate questions that have the potential to slow down your search for funds. However, when you turn your attention to the best options, it’s easier to make an informed and confident decision.

For many people, the big question is this: is it best to use a personal loan or credit card?

While there’s no right or wrong answer, there are steps you can take to ensure that you head down the right path.

Let’s take a closer look at some of the finer details associated with personal loans and credit cards.

1. Interest Rate

Generally speaking, you can expect a lower interest rate on a personal loan. This doesn’t hold true across the board—such as if you’re using a balance transfer credit card—but it’s something you should expect.

With a lower rate of interest, you won’t pay as much money out of your pocket every month. As a result, you may find it easier to repay the money you borrowed in a more timely manner.

2. Term

With a personal loan, your term is fixed. For example, you borrow $50,000 at six percent interest for 60 months.

With a credit card, there is no term. Instead, you can spend all the way up to your credit limit, with your only obligation being the minimum monthly payment.

The problem with this approach is that you can get into a nasty cycle of paying down your balance and then spending again.

3. Monthly Payment

Some people are in search for the lowest possible monthly payment, regardless of the short and long-term effect on their finances. Others would rather know what they’re borrowing, know what their monthly payment is, and have a clear idea of when it will be gone for good.

You’re likely to have a higher monthly payment with a personal loan, but you also have a clear idea of how long it’ll take to eliminate your balance.

A credit card may give you access to a lower monthly payment, especially as you pay down the balance, but it may take longer to reach the end of the road.

Final Thoughts

If you’re interested in either a personal loan or credit card, compare the details above along with any others that you consider important.

Once you understand the pros and cons of both a personal loan and credit card, you can make a better decision on what to do next.

What are your thoughts on a personal loan vs. credit card? Do you have a preference? Have you used one or both of these in the past?