# Credit card vs personal loan — which is cheaper for borrowing in the UK?

> Compare · Last reviewed 26 May 2026

Canonical HTML: https://moneyguide.org.uk/compare/credit-card-vs-personal-loan/
Markdown mirror: https://moneyguide.org.uk/compare/credit-card-vs-personal-loan.md

## Quick answer

A 0% purchase or balance-transfer credit card can be the cheapest way to borrow if you'll clear the balance before the 0% period ends. A personal loan is usually cheaper for larger amounts repaid over 2–7 years at a fixed rate.

## Skip this if

Skip this comparison if you need a live quote or a personal recommendation. It is a criteria table, not a product ranking — confirm today's terms with the provider before you apply.

Section 75 of the Consumer Credit Act 1974 makes a credit card uniquely useful for purchases between £100 and £30,000 — the card company is jointly liable if the seller fails to deliver. Personal loans don't have that protection.

## Credit card vs Personal loan

| Criterion | Credit card | Personal loan |
| --- | --- | --- |
| Interest rate | 0% intro then ~20–30% APR | Fixed for the term (often 7–15% APR) |
| Repayment | Flexible minimum payment | Fixed monthly repayment |
| Typical amount | Up to your credit limit | £1,000 – £25,000 |
| Typical term | Revolving — no end date | 1–7 years |
| Section 75 protection | Yes — £100 to £30,000 purchases | No |
| Effect on credit score | High utilisation can hurt score | Generally neutral if repaid on time |
| Settlement before term | Anytime, no penalty | May incur up to 58 days' interest |

## When Credit card suits

- You can clear the balance before the 0% deal ends
- You need Section 75 purchase protection
- The amount is small and you want flexibility

## When Personal loan suits

- You need a fixed amount with a fixed end date
- You want certainty over monthly payments
- The amount is too large for a 0% card
- You won't realistically clear a card balance in the 0% window

## Frequently asked questions

### Does applying for a credit card hurt my credit score?

A full application leaves a hard search on your file. Multiple hard searches in a short period can lower your score. Most lenders offer a soft-search 'eligibility check' that doesn't affect your score and gives a personalised acceptance odds.

### What is APR and is the rate I get the same?

APR is the Annual Percentage Rate including interest and standard fees. Lenders must offer the advertised representative APR to at least 51% of accepted customers — you could be offered a higher rate.

### Can I pay off a personal loan early?

Yes. Under the Consumer Credit Act you can settle early at any time. The lender can charge up to 58 days' interest in compensation for loans over £8,000 (28 days for smaller loans). Ask for a settlement figure first.

## Sources

- [Consumer Credit Act 1974, s.75](https://www.legislation.gov.uk/ukpga/1974/39/section/75)
- [Legislation.gov.uk — Consumer Credit Act 1974](https://www.legislation.gov.uk/ukpga/1974/39)

---

Independent UK money guidance from [Money Guide](https://moneyguide.org.uk). Money Guide is not a financial adviser and does not currently earn commission on credit cards. This guide is educational information only — always check the issuer's own terms, eligibility checkers and fees before applying. 18+, subject to status. Credit is a commitment: only borrow what you can repay in full each month, because interest charges erase every reward on this page.