Credit cards vs Personal loans – The Pros and Cons

General Article

Credit Cards Vs Small Personal Loans | All You Need To Know

When it comes to needing a bit of spare cash to cover an unplanned purchase you have a few options to choose from. The type of finance that you opt for can depend on whether you’re looking to make a larger or smaller purchase. From small personal loans to credit cards, you’re spoilt for choice when it comes to financing options.

The hard part is deciding which of these options are best suited to you and your needs. If you need a bit of help deciding between the two, Breezy Loans has you covered with our breakdown of the pros and cons of both.

What is a credit card?

A credit card is a type of continuing credit contract that you will have with an institution such as a bank or traditional lender. It allows you to continue to use the credit that is available to you, up to a certain contractual amount as long as you make the minimum monthly repayments that are due. This is a great option for those who want the option of making small purchases on their card and want a bit of flexibility in their credit.

● Flexible and easy to use
● Ongoing credit option
● Can be used almost anywhere
● Great for small expenses that can be paid off fairly quickly

● Repayments can vary depending on how much you owe on the card – sometimes they can be higher than you expect if your balance has increased recently and interest-free periods are up
● Higher interest rates

What is a small personal loan?

A small personal loan is a type of credit contract that can be used to cover a number of different circumstances and purchases. It is generally a one-off credit contract that unless previously organized with your lender, is not continuing.

This means that it generally cannot be drawn upon again. Personal loans are fantastic for larger purchases and for those who want a bit more structure with their repayments as the minimum repayment amount will be agreed upon and set before signing the contract.

● Great for larger purchases that take a bit longer to pay off
● Lower interest rate than credit cards
● Structured repayment plan – no surprise repayment amounts
● Easy to apply for

● Not as convenient as a credit card
● You, Will, need to reapply if you require further finance
● Less flexibility in repayments – set repayment amount regardless of what amount is owing on the loan.

What’s the right product for you?

There is no set answer as to which is the better financial option. Everyone’s situations are different and what might be just right for one person, might not be the best option for someone else. It’s a personal choice that is best tailored to your specific situation. Choosing the right financial product for you will depend on a couple of different factors.

Flexible repayments

Some people like structured repayments where they know what amount they’re paying when it’s due to be direct debited from their account and how long the repayments will last. Others prefer to have a little bit more flexibility in their repayment schedule.

Small personal loans feature a more structured repayment schedule as opposed to a credit card so it’s important to decide which type of repayments will work best for your finances.

Why you’re applying for the funds

This can be a big deciding factor in what kind of finance is right for you. If you’re looking to make a bigger purchase such as a car, motorbike or some expensive equipment that will set you back a fair bit, a personal loan may be the right option for you.

If, however, you weren’t planning on making a bigger purchase but want a line of credit for smaller everyday purchases or to have it as a backup in case of emergencies, a credit card might be the right option for you. Again, deciding why you need the spare funds and how much you might need will help you figure out which option is best.


Both finance options have a few different fees that are applicable to them. A small personal loan tends to attract an application fee or establishment fee of a set amount. They can also have service fees applied to them, depending on which lender you apply with.

A credit card, on the other hand, generally tends to only have an annual fee applicable to them.

Interest rates and other charges

Interest rates for a small personal loan and a credit card can vary greatly. A small personal loan tends to have a much lower interest rate compared to a credit card. Because the interest rate is set, this means that small personal loans are generally cheaper than a credit card in the long run.

The interest rate on a credit card is much higher than that of a small personal loan and can vary, depending upon which lender the credit card is with.

One important point to keep in mind is the fact that most credit cards will have an interest free period on purchases. A great way to keep the costs of interest rates down is to pay the purchases off before the interest-free period is up. If you can keep on top of the balance and the interest-free periods you can save yourself a lot in fees, making the credit card a great option.

Credit cards vs. Small personal loans

Deciding which option is right for you is a personal choice based upon what would suit your finances and lifestyle best. If you’re looking to make a bigger purchase and want the security of set repayments, then a small personal loan might just be right for you.

If you were looking for a finance option that you could use more in your daily life and are happy to have more flexible repayments then a credit card may just be the option for you. Take a good look over your finances and see which option will fit into your current financial situation best before making your decision.

Source: Personal loans vs credit cards

Searching for a breezy, personal loan?

Look no further than Breezy Loans for quick finance topped with top-notch customer service and loan specialists who get it.

Breezy Loans Pty Ltd ABN: 29 627 702 943, Credit Representative Number 514197 is licensed and provide credit services under Australian Credit License 389610. If we could not provide you credit, we will help to match your credit enquiry with another lender partner from our panel of lenders who we think may help you. Our panel of lender partners are licensed and follow responsible lending practice. We may receive referral fee (amount not ascertainable) if you decide to go with them once approved. However, they may ask you further information to assess your loan application where you can deal directly with that lender.The information on this website is general in nature and does not take into account your objectives, financial situation or needs & does not constitute any financial advice. We strongly recommend you take independent advice before choosing any loan product.

Disclaimer: "Same Day Approval" as advertised - means, the applicant will get the application outcome on the same working day. If you are applying after working hours, you will get the reply next working day. Public holidays might affect the process of the outcome.

Disclaimer: "No Credit Check Loans" as advertised - means, most of the decisions are based on the present income of the applicant. There could be several reasons behind bad credit in past. A strong employment history and zero dishonour in last 90 days are required to be eligible for a no credit check loan. The lender can also perform a credit check as it is a part of application processing.


*Instant transfer is available to PayID holders with participating Australian financial institutions. Most of the payments are typically settled in under 60 seconds but may be subject to checks and holds at the sending or receiving bank. As the reason, our standard payment transfer time is 24 hours.

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