When you need to borrow money you have several options available to you. Two of those options are to apply for a credit card or get a personal loan. These have plenty of similarities. But when it comes to choosing which is right for you, it’s the differences you should be concerned with.

If you’re torn between credit cards and personal loans for your own financing needs, let’s look at some situations where one may make more sense than the other.

Reasons to Opt for a Credit Card

If any of the following apply to you, you would probably be better off getting a new credit card.

1. You want access to credit for ongoing purchases (a revolving account).
2. You want access to a rewards programme like that offered with the Bankwest More credit card.
3. You don’t want to be locked into a fixed monthly payment amount. Instead you can choose anywhere from the minimum monthly payment to the total amount due.
4. You’re mostly interested in convenience and being able to use a card for purchases and bill payments.

Reasons to Opt for a Personal Loan

On the other hand, if these apply to you, a personal loan might be a better fit.

1. You only need financing for a short period of time or for a single purchase (such as to finance home repairs).
2. You want easier access to cash from your borrowed funds. With a personal loan you can get cash from the loan amount without absurdly high cash advance fees common to credit cards.
3. You need a larger amount of money than you can get through a credit card. If you’re eligible for a high credit card limit, you might be fine with the credit card instead. But if you need to finance a large purchase, you might have a better chance of getting the amount you need in the form of a loan.
4. You want lower interest rates, as personal loans often feature lower rates than similar credit cards. That said, credit cards can offer lower introductory rates.

Both credit cards and personal loans can be good borrowing options as long as you choose the right ones at the right times. You may very well have both. But before you charge a big purchase to a high interest credit card, consider your other options. And do the same before applying for a new loan if an existing credit card would already satisfy your needs.