Credit card vs personal loan — which is cheaper for borrowing in the UK?
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In short. 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.
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.
Last reviewed:
Side by side
Interest rate
Credit card
0% intro then ~20–30% APR
Personal loan
Fixed for the term (often 7–15% APR)
Repayment
Credit card
Flexible minimum payment
Personal loan
Fixed monthly repayment
Typical amount
Credit card
Up to your credit limit
Personal loan
£1,000 – £25,000
Typical term
Credit card
Revolving — no end date
Personal loan
1–7 years
Section 75 protection
Credit card
Yes — £100 to £30,000 purchases
Personal loan
No
Effect on credit score
Credit card
High utilisation can hurt score
Personal loan
Generally neutral if repaid on time
Settlement before term
Credit card
Anytime, no penalty
Personal loan
May incur up to 58 days' interest
When Credit card usually wins
- 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 usually wins
- 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
Related quick answers
FAQ
- 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.