Should you take out a personal loan or get a credit card?
While credit cards and personal loans are both types of credit provided by financial institutions, that generally require you to make regular payments in order to pay off the amount you borrowed (plus any interest charges),there are some key differences to be aware of:
A credit card allows you to borrow money from a financial institution to make purchases and cash advances up to an assigned credit limit. You must make repayments every month, with the minimum repayment specified. If you repay the amount spent within the statement period or within the interest free day period (if offered), you can avoid the interest charges.
A personal loan is a lump sum of money given with the provision that it needs to be repaid in equal instalments over a specific period of time – usually over the loan tenor you choose, and with interest. Personal loans can either have a variable interest rate, which can change based on the market rate, or a fixed interest rate, where the interest rate charged on the loan is fixed for the duration of the loan. Personal loans usually incur lower interest rates than credit cards.
Check out our 5-step guide to help you make the decision between a personal loan and credit card.
1) How much credit do you need?
Take into consideration the amount of money you want to borrow when choosing between a personal loan or credit card. As mentioned, you generally have access to the same amount of money whether it’s a personal loan or credit card, but one may be better depending on how much you need. The minimum and maximum credit limit available on credit cards also vary, so choose one that meets your need.
With a Citi Personal Loan Plus you can borrow anywhere between $5,000 to $75,000.
2) How much credit can you access?
If you’re in need of a one-off sum of money – perhaps to cover a holiday, renovate your home or plan a special occasion – a personal loan is the best choice for long-term financing and big expenses. As the interest charges are typically lower than a credit card, a loan is a good option if you aren’t able to pay off the amount in full each month.
If what you need is extra money to help manage cash flow or would like access to credit on a continual basis – such as to pay off monthly bills or for daily expenses – you would find a credit card suits you best. They are also ideal if you are looking to earn reward points when you spend. These points can then be redeemed for things such as flights, experiences, or gift cards. In a credit card, the credit limit or the amount of credit made available to you is based on several factors such as your income, expenses and credit rating. And there’s usually the added advantage of the interest-free period (normally up to 55 days) you’re given to pay off your purchases.
Estimate how much credit you can borrow with Citi by using our Borrowing power calculator.
3) Which form of repayments suit your lifestyle?
How do you want to make your repayments? With a personal loan, you will need to stick to a payment schedule whereby a certain amount is repaid every month, over a set period of time. This time frame generally varies from 1 to 5 years. Some personal loan providers will also allow you to make lump sum repayments or make extra repayments without any fees.
Need help on deciding how much you should borrow? Use our simple Loan repayment calculator to find out what your loan repayments will be.
A credit card offers greater flexibility with repayments, so you can pay as much or as little as you like as long as it’s at least the minimum payment due. If your credit card offers an interest-free period, you can also avoid the interest charges by paying the monthly amount due in full on or before the payment due date. So if you’re capable of managing your short-term finances and want the convenience of adjusting your repayments accordingly, a credit card is for you.
Need a little help deciding which credit card is right for you? Use our handy Card selector tool to let us help narrow it down based on a few quick questions.
4) Fees and charges involved
Whether you choose a personal loan or a credit card, both options will come with fees and charges. Personal loans typically come with an establishment or application fee and a monthly fee. An annual fee is generally charged on credit cards, and a fee for withdrawing cash. These charges vary across credit providers, so check the small print carefully. Look for:
- Standard Variable Rate (%)
- Establishment or application fee
- Monthly or annual service fee
- Cash advance fee
- Early pay out fee
- Late payment fee
- Additional repayments fee
Did you know? Citi doesn’t charge cash advance fees, early pay out or additional repayment fees on Citi Personal Loan Plus.
5) Rewards and benefits
Along with flexible monthly repayments, most credit card companies offer a range of rewards for customers who want to be rewarded for their spending. These can include special retail discounts and promotional interest offers – or even a free bottle of wine! But the rewards aren’t just for those looking to redeem their points. There’s also an array of benefits customers can enjoy, such as travel insurance and extended warranty on whitegoods. Be sure to check the full range of benefits and features on offer by the credit provider so you know you’re getting the best deal.
Be sure to check out if there are any added benefits with your personal loans as well. Surprisingly some personal loans also have added features you may not be aware of, including the added option of a reusable credit facility. With Citi Personal Loan Plus, this not only allows you to reuse your available credit limit but gives access to a range of benefits including complimentary insurance1, such as extended warranty, purchase cover and guaranteed pricing scheme.
Whether it’s a personal loan or credit card you’ve decided on, Citi can finance your life and turn possibilities into realities. Take a look at our Personal Lending options or range of Credit Cards to find out more.
Any advice is general advice only. It was prepared without taking into account your objectives, financial situation, or needs. You should consider if this advice is appropriate for your situation. We recommend you read the Product Disclosure Statement (PDS) or Terms and Conditions available online in addition to seeking independent legal, financial and taxation advice on your personal circumstances before acting on the information contained in this material.
While credit cards and personal loans are both types of credit provided by financial institutions, that generally require you to make regular payments in order to pay off the amount you borrowed (plus any interest charges),there are some key differences to be aware of:
A credit card allows you to borrow money from a financial institution to make purchases and cash advances up to an assigned credit limit. You must make repayments every month, with the minimum repayment specified. If you repay the amount spent within the statement period or within the interest free day period (if offered), you can avoid the interest charges.
A personal loan is a lump sum of money given with the provision that it needs to be repaid in equal instalments over a specific period of time – usually over the loan tenor you choose, and with interest. Personal loans can either have a variable interest rate, which can change based on the market rate, or a fixed interest rate, where the interest rate charged on the loan is fixed for the duration of the loan. Personal loans usually incur lower interest rates than credit cards.
Check out our 5-step guide to help you make the decision between a personal loan and credit card.
1) How much credit do you need?
Take into consideration the amount of money you want to borrow when choosing between a personal loan or credit card. As mentioned, you generally have access to the same amount of money whether it’s a personal loan or credit card, but one may be better depending on how much you need. The minimum and maximum credit limit available on credit cards also vary, so choose one that meets your need.
With a Citi Personal Loan Plus you can borrow anywhere between $5,000 to $75,000.
2) How much credit can you access?
If you’re in need of a one-off sum of money – perhaps to cover a holiday, renovate your home or plan a special occasion – a personal loan is the best choice for long-term financing and big expenses. As the interest charges are typically lower than a credit card, a loan is a good option if you aren’t able to pay off the amount in full each month.
If what you need is extra money to help manage cash flow or would like access to credit on a continual basis – such as to pay off monthly bills or for daily expenses – you would find a credit card suits you best. They are also ideal if you are looking to earn reward points when you spend. These points can then be redeemed for things such as flights, experiences, or gift cards. In a credit card, the credit limit or the amount of credit made available to you is based on several factors such as your income, expenses and credit rating. And there’s usually the added advantage of the interest-free period (normally up to 55 days) you’re given to pay off your purchases.
Estimate how much credit you can borrow with Citi by using our Borrowing power calculator.
3) Which form of repayments suit your lifestyle?
How do you want to make your repayments? With a personal loan, you will need to stick to a payment schedule whereby a certain amount is repaid every month, over a set period of time. This time frame generally varies from 1 to 5 years. Some personal loan providers will also allow you to make lump sum repayments or make extra repayments without any fees.
Need help on deciding how much you should borrow? Use our simple Loan repayment calculator to find out what your loan repayments will be.
A credit card offers greater flexibility with repayments, so you can pay as much or as little as you like as long as it’s at least the minimum payment due. If your credit card offers an interest-free period, you can also avoid the interest charges by paying the monthly amount due in full on or before the payment due date. So if you’re capable of managing your short-term finances and want the convenience of adjusting your repayments accordingly, a credit card is for you.
Need a little help deciding which credit card is right for you? Use our handy Card selector tool to let us help narrow it down based on a few quick questions.
4) Fees and charges involved
Whether you choose a personal loan or a credit card, both options will come with fees and charges. Personal loans typically come with an establishment or application fee and a monthly fee. An annual fee is generally charged on credit cards, and a fee for withdrawing cash. These charges vary across credit providers, so check the small print carefully. Look for:
- Standard Variable Rate (%)
- Establishment or application fee
- Monthly or annual service fee
- Cash advance fee
- Early pay out fee
- Late payment fee
- Additional repayments fee
Did you know? Citi doesn’t charge cash advance fees, early pay out or additional repayment fees on Citi Personal Loan Plus.
5) Rewards and benefits
Along with flexible monthly repayments, most credit card companies offer a range of rewards for customers who want to be rewarded for their spending. These can include special retail discounts and promotional interest offers – or even a free bottle of wine! But the rewards aren’t just for those looking to redeem their points. There’s also an array of benefits customers can enjoy, such as travel insurance and extended warranty on whitegoods. Be sure to check the full range of benefits and features on offer by the credit provider so you know you’re getting the best deal.
Be sure to check out if there are any added benefits with your personal loans as well. Surprisingly some personal loans also have added features you may not be aware of, including the added option of a reusable credit facility. With Citi Personal Loan Plus, this not only allows you to reuse your available credit limit but gives access to a range of benefits including complimentary insurance1, such as extended warranty, purchase cover and guaranteed pricing scheme.
Whether it’s a personal loan or credit card you’ve decided on, Citi can finance your life and turn possibilities into realities. Take a look at our Personal Lending options or range of Credit Cards to find out more.
Any advice is general advice only. It was prepared without taking into account your objectives, financial situation, or needs. You should consider if this advice is appropriate for your situation. We recommend you read the Product Disclosure Statement (PDS) or Terms and Conditions available online in addition to seeking independent legal, financial and taxation advice on your personal circumstances before acting on the information contained in this material.
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Whether you're looking for a credit card with rewards benefits, a balance transfer, a low interest rate or no annual fee, you'll find it at Citi.