Card Loan vs. Personal Loan: Which Costs More?
Card loans and personal loans both provide fast access to cash, but the interest cost can differ dramatically. A credit card cash advance or card loan typically carries an APR of 20–30%, while a personal bank loan averages 6–15% for borrowers with good credit.
On a $10,000 loan over 12 months, a card loan at 24.9% APR costs roughly $1,380 in total interest, while a personal loan at 8.5% APR costs only about $460—a savings of over $900. For a 36-month term, the gap widens to well over $2,000.
Card loans excel at convenience: approval is often instant with no additional paperwork. However, if you need funds for more than a month or two, a personal loan or balance-transfer offer can significantly reduce your interest burden. Always compare the total cost, not just the monthly payment.
Frequently Asked Questions
Applying for a personal loan triggers a hard inquiry, which may temporarily lower your score by a few points. Successfully repaying the loan builds your credit history and can improve your score over time.
Yes. You can take out a personal loan and use the proceeds to pay off your card loan balance—a process called debt consolidation. Check for any prepayment penalties on the card loan before doing so.