Ever found yourself needing extra cash and wondering, “Should I get a personal loan or use my credit card?” It’s a common question, and the answer isn’t always simple. When you’re short on funds, both .
Whether you’re handling an emergency, paying unforeseen expenses, or organizing a vacation, picking the appropriate kind of financing can help you save money and feel less stressed.
In this blog, we’ll go over the main distinctions between credit cards and personal loans. Also, you will learn how consulting with reputable personal loan brokers in Melbourne can help you choose the right course of action for your situation.
Understanding Personal Loans
Lenders (banks, credit unions, and non-bank financial institutions) make one-off payments over a set time frame, usually one to seven years. There are two types of Australian personal loans: unsecured (no security needed) and secured (backed by collateral like a car).
Key Features of Personal Loans:
- Fixed or variable interest rates
- Set repayment schedule
- Loan amounts typically range from $2,000 to $100,000
- Lower interest rates than most credit cards
- Can be used for almost any purpose
Comparison: Personal Loan vs Credit Card in Australia
Feature | Personal Loan | Credit Card |
Interest Rate | Lower (avg. 6%–12%) | Higher (avg. 18%–22%) |
Loan Amount | $2,000–$100,000 | $1,000–$30,000 |
Repayment Term | Fixed (1–7 years) | Flexible, revolving |
Best For | Large expenses, debt consolidation | Small or recurring purchases |
Impact on Credit Score | Predictable if repaid on time | Can be risky if balances are carried |
Discipline Required | Moderate (fixed payments) | High (easy to overspend) |
Choosing Between a Personal Loan and Credit Card
You should consider a personal loan if:
- You must take out a bigger loan.
- Structured repayments are what you desire.
- Several bills are combined into a single, manageable payment with your payment plan.
- You’re paying for a one-time event, like a wedding or a car.
For example, let’s say you’re planning a $20,000 kitchen renovation. With a personal loan, you know precisely how much you will pay each month and for how long because the interest rate is lower and the repayment terms are set.
A credit card might be more appropriate if:
- You need to cover smaller, frequent purchases
- You are certain that you can afford to make the entire monthly payment
- You want rewards or cashback perks
- You have emergency expenses that need instant access to funds
- You want the flexibility to repay over time
If you’re confident in your discipline, using a 0% interest credit card for the first 12–18 months (introductory offer) can help you fund small purchases without interest—provided you pay it off before the offer ends.
Also Read- Global Finance: Can Non-Residents Access Personal Loans in Australia?
The Role of a Personal Loan Brokers in Melbourne
It’s not always simple to choose between a personal loan and a credit card. A broker can assist with that.
Based on your financial situation, a personal loan brokers in Melbourne evaluates dozens of loan products from banks, credit unions, and non-bank lenders to identify the best offer.
A financial broker in Melbourne can assist you in the following ways:
- Compare interest rates and terms across multiple lenders
- Tailor options to your income, credit score, and purpose
- Help with paperwork and application process
- Increase your approval chances
- Negotiate better deals or uncover hidden fees
A broker’s advice is especially helpful when unsure what fits your budget best. Over the course of the loan, you could save thousands of dollars thanks to their access to non-advertised lending options.
Do you require a credit card or a personal loan?
Making the right financial decision can be difficult, but you don’t have to. Our experienced lending finance broker in Melbourne at LTE Loans provides beneficial advice at each process stage.
We can help you find the best option by examining offers from multiple lenders. We also provide free financial consultations to help you assess your options.
To begin on a suitable financial route, give us a call or make an appointment online right now!
Conclusion
In conclusion, there are benefits and drawbacks to both credit cards and personal loans. If you need to make regular payments or a one-time payment for a big purchase, a personal loan might be the best option. Credit cards could be a better option for rewards points or small, recurring costs if you can handle repayments.
Ultimately, the decision is yours.
LTE Loans can help you to determine the best deal and simplify the loan process if you are unsure. To take control of your money right now, speak with one of our brokers.
