Personal loans and credit cards are not interchangeable. Personal loans are structured: fixed amount, fixed term, fixed repayments, with rates typically between 7% and 13% per annum depending on your credit profile. Credit cards are flexible but expensive: typical rates between 18% and 22% per annum, no fixed term, and the temptation to pay only the minimum.
When credit cards genuinely win
For short-term cash flow under $2,000 that you can clear within an interest-free period, a credit card on a 0% balance transfer offer is usually the cheapest option. The interest-free window matters: if you cannot clear it before the offer ends, the rate reverts and the maths changes sharply.
When personal loans win
“Credit cards win on flexibility for under $2,000 short-term needs. Personal loans win on cost almost everywhere else.
For amounts above $5,000 with a 12 to 60-month repayment horizon, personal loans are dramatically cheaper. On a $20,000 balance over 36 months, a 9% personal loan costs around $2,890 in interest. The same balance carried on an 18% credit card with minimum payments costs over $7,000 across roughly the same period.
The hybrid case
If you have a mix of credit card debt and store-card debt sitting at high rates, a debt consolidation personal loan often clears the lot at a much lower blended rate. Cashtech walks through the breakeven on this calculation before recommending either way.
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