When you need to borrow money, what’s the better deal — your credit card or getting a personal loan? Let’s say you want to start a home improvement project, and you’ll need $5000. Let’s also say that you won’t be able to take advantage of interest free days from your credit card, because you know this will be a longer-term financed project.

At that required credit limit, either a credit card or personal loan could work for you. It’s often assumed that personal loans are the better deal because they’re known for having lower interest rates. That’s not always the case though, as you can see below in a comparison between a Citibank Clear credit card and Citibank’s Ready Credit Project Loan.

The Credit Card

The Citibank Clear credit card allows for credit limits up to $20,000 (depending on your credit history and income), so it will likely meet your general funding needs. It’s convenient. You can easily use it to purchase supplies for your home improvement project directly in a store or over the phone if you need to have materials shipped to you.

This is a low interest credit card, with a 12.49% APR on purchases, and an annual fee of $65. It does offer 55 interest free days, but you plan to pay off the balance over time so you won’t benefit from that.

The Personal Loan

If you were to get a project loan through Citibank (the same issuer of the credit card), a few things might surprise you. First, the personal loan is just as convenient as using a credit card for purchases. They give you both cheques and a debit card to access the funds.

Even more surprising perhaps is the interest rate. In this case, you would actually be charged more interest with a personal loan, at a 17.99% APR. However, there is no application fee or any transaction fees.

A benefit to the personal loan is that you aren’t charged more for a cash advance from your credit limit. You still pay the 17.99% interest rate. With the credit card, if you need cash to pay for something you’ll be charged a higher interest rate of 20.74%.

The Not-So-Clear Choice

While in this case the Citibank Clear credit card would likely be a better choice due to the significantly lower interest rate, it’s just one example. As you can see from Citibank’s personal loan information, loans are working much more like credit cards these days. Just like choosing between credit cards, you’ll need to evaluate each card and personal loan on its own merits when figuring out which is the better deal for your own borrowing needs.