Personal Loans or Credit Cards for Big Purchases? 6 Insights

Learn when to use a personal loan vs credit card for big purchases. Compare costs, repayment, and find your best option.

There are times when a major purchase—such as a home renovation, a medical procedure, or a business investment—can’t wait until you’ve saved enough to pay in cash. While the idea of taking on debt may seem intimidating, financing a big-ticket expense can be a practical financial move when done strategically. The key is to choose the right option and have a clear plan for repayment to keep your budget on track.

Should You Use a Personal Loan or Credit Card for Big Purchases?

Personal loans and credit cards are two of the most common ways to fund a large expense, but between the two of them, the best choice isn’t always as straightforward as you’d think. Both can provide significant financial relief, but due to prevalent misconceptions about their costs, repayment structures, and long-term impact, it can understandably be tough to figure out which will suit you better. The right choice depends not just on affordability, but also on how each option aligns with your financial priorities.

Wondering how to fund your next big buy? Read on for more insight on when it makes sense to use a personal loan and when a credit card may be the better fit.

When to Use a Personal Loan

You Need Higher Borrowing Limits

Some purchases simply exceed what a credit card can reasonably cover. Many credit cards offer substantial credit limits, but they may not be enough for big-ticket expenses like funding a wedding or a major home renovation.

For instance, Maya Personal Loan allows you to borrow as much as PHP 250,000, with the funds instantly disbursed to your Maya Wallet upon approval. This solution is becoming increasingly known as the best personal loan Philippines’ borrowers recommend due to its accessibility and the generosity of its terms.

You Need More Time to Pay Off Your Purchase

It’s not always possible to comfortably repay a major purchase in just a few months. If you’re facing an expense that will take a year or more to settle, a personal loan is often the more practical solution. Since they come with repayment terms that typically range from 12 to 60 months or longer, personal loans allow you to spread out payments over time without the pressure of a high monthly balance.

Unlike credit cards, which often come with steep interest rates that can compound quickly, personal loans also usually offer lower, fixed rates. Your monthly payments will be predictable, which in turn makes it easier to budget for your purchase without worrying about fluctuating interest costs. The stability of a personal loan can be a major advantage especially for purchases such as medical treatments, home improvements, or large business expenses.

You Want a Structured Repayment Plan

The structured nature of a personal loan is a major plus if you prefer financial flexibility. Each loan comes with a fixed repayment schedule, which means that you’ll pay a consistent amount every month until the loan is fully repaid by its set end date. This makes it easier to plan your finances without the risk of accumulating revolving debt, which is common with credit cards.

When to Use a Credit Card

You Need Immediate Access to Funds

Some expenses come up unexpectedly, leaving no time for loan approvals or paperwork. You can depend on your credit card for expenses like urgent car repairs, last-minute travel, or a time-sensitive business opportunity.

Just make sure you have a strategy in place for paying off your balance to avoid accumulating costly interest charges.

You Can Pay Off Your Balance Quickly

If your budget allows you to repay your purchase in full within a billing cycle—or at least within a few months—paying with a credit card is a flexible option. Most credit cards come with a grace period of 20 to 30 days, during which you can pay off your balance without incurring interest. This essentially allows you to borrow money for free, as long as you clear the full amount by the due date, and the strategy is best applied for smaller-ticket purchases.

You Want to Take Advantage of Rewards or Special Offers

Beyond convenience, many credit cards offer valuable rewards programs that can make your purchase more cost-effective. Cashback, travel rewards, or points-based credit cards typically allow you to earn perks for transactions within eligible categories. This is especially beneficial for large purchases that line up with your card’s rewards structure, as they can help you accumulate rewards at an even faster rate.

Some credit cards also offer 0% interest installment plans for select purchases. Instead of paying a lump sum, you can break the cost into fixed, interest-free payments over several months. This makes it possible to spread out expenses without incurring extra costs, provided you meet the payment terms.

Personal Loan vs Credit Card: Which One Makes More Sense?

At its core, choosing between a personal loan and a credit card is about aligning your financing method with your financial goals. Now that you’re more familiar with the advantages and limitations of each option, you can make smarter borrowing decisions that will keep you in control of your finances. Before making a major purchase, take a step back and ask yourself: which option sets you up for long-term stability, not just short-term affordability?