Credit card, personal loan or line of credit: which should you choose?
Published on 06/14/2023
Managing your finances can be a challenging task but knowing your options can help you feel more confident and secure throughout your financial life.
Whether you want to treat yourself or need to pay for an unforeseen expense, there may come a time when you look at borrowing funds to cover expenses.
There are several options available to consumers looking to borrow money, including credit cards, personal loans and personal lines of credit. But what should you choose? Each of these options has its uses, so it's essential to understand them before deciding.
Credit Cards
Credit cards are a form of revolving credit, meaning you can repeatedly borrow against the card as the outstanding balance is repaid. Even if you pay the full balance, the credit remains available to you.
Some credit cards also offer perks in the form of rewards, such as a percentage of cash back on purchases, or no fees for things like balance transfers or cash advances.
Choose a credit card if you:
Credit cards can have higher interest rates than personal loans, but they offer greater flexibility, allowing you to borrow smaller amounts for short-term needs.
From Kinecta’s cash-back rewards MyPerks1 card to the low-interest rate and zero fees MyPower2 card to the credit-building secured MyPlan3 card, Kinecta’s credit cards offer something for everyone.
Personal Loans
Personal loans are a type of loan where a lender provides you with a specific amount of money that you repay with interest in fixed payments over a period of time.
These loans can be especially helpful for larger purchases.
Choose a personal loan if you:
Personal loans are often less expensive over time than carrying a credit card balance due to more favorable rates.
Kinecta’s Signature Personal Loan4 offers you low rates, loan amounts from $1,000 to $100,000, and terms up to 84 months.
Personal Lines of Credit
A personal lines of credit (PLOC) is a revolving loan and falls somewhere in between a credit card and a personal loan. Like credit cards, they are a form of revolving credit, providing a convenient way to borrow money on an ongoing basis with a variable rate. And like a personal loan, you benefit from a more favorable interest rate.
Line amounts are typically higher than credit cards and since you only pay interest on the portion of the line you use, PLOCs can be a great choice when you need access to larger amounts of cash but aren’t sure of the total costs.
Choose a personal line of credit if you:
PLOCs typically have lower interest rates than credit cards, but some lenders charge annual fees to have one.
Kinecta’s Signature Personal Line of Credit5 has no annual fee, amounts from $1,000 to $100,000 and the ability to easily transfer funds to your checking account in online banking.
Which should you choose?
Although there are many similarities and differences between credit cards, personal loans and PLOCs, one isn’t necessarily better than the other—it just comes down to your financial situation.
Each option can be used for things like:
Before borrowing, it's essential to consider your financial needs and repayment ability to choose the option that's right for you.
You can also speak with a Kinecta representative at any time to discuss your options in-branch, over the phone or by booking a virtual online appointment. We’re here to help.
1Myperks Terms & Conditions - click here.
2Mypower Terms & Conditions - click here.
3Myplan Terms & Conditions - click here.
4Signature Personal Loan. Subject to credit approval. Rates, loan amounts, and terms are based on standard underwriting factors. Maximum loan amount is $100,000. Minimum repayment term is 12 months, maximum repayment term is 84 months. Monthly payment per $1,000 borrowed at 9.74% APR (after automatic payment discount applied) over a term of 12 months is estimated to be $87.80, over a term of 84 months is estimated to be $16.47.
5Signature Personal Line of Credit. Subject to credit approval. Rates, loan amounts, and terms are based on standard underwriting factors. Maximum line amount is $100,000. Variable APR based on The Wall Street Journal Prime Rate (the “Index”) plus a margin. This variable rate may vary with changes in the Prime Rate.
Overdraft automatic transfers. If enrolled, the account will be subject to the interest rate on the loan.
Minimum Periodic Payment & Fees. Minimum periodic payment for lines of credit is 4% of the outstanding loan balance as of the date the billing cycle closes; however, it will not be less than $30.00 or the balance due, whichever is less. If the minimum periodic payment is more than 15 days late, a late charge of $20.00 will be assessed.
Managing your finances can be a challenging task but knowing your options can help you feel more confident and secure throughout your financial life.
Whether you want to treat yourself or need to pay for an unforeseen expense, there may come a time when you look at borrowing funds to cover expenses.
There are several options available to consumers looking to borrow money, including credit cards, personal loans and personal lines of credit. But what should you choose? Each of these options has its uses, so it's essential to understand them before deciding.
Credit Cards
Credit cards are a form of revolving credit, meaning you can repeatedly borrow against the card as the outstanding balance is repaid. Even if you pay the full balance, the credit remains available to you.
Some credit cards also offer perks in the form of rewards, such as a percentage of cash back on purchases, or no fees for things like balance transfers or cash advances.
Choose a credit card if you:
- Want a financial safety net for unexpected and more immediate costs
- Don’t have a specific expense or amount of money needed (e.g., a home improvement project with a set budget)
- Are comfortable having different payment amounts each month
Credit cards can have higher interest rates than personal loans, but they offer greater flexibility, allowing you to borrow smaller amounts for short-term needs.
From Kinecta’s cash-back rewards MyPerks1 card to the low-interest rate and zero fees MyPower2 card to the credit-building secured MyPlan3 card, Kinecta’s credit cards offer something for everyone.
Personal Loans
Personal loans are a type of loan where a lender provides you with a specific amount of money that you repay with interest in fixed payments over a period of time.
These loans can be especially helpful for larger purchases.
Choose a personal loan if you:
- Need a certain amount of money
- Have specific expenses you know you need to cover
- Want to pay the funds back in equal installments every month
Personal loans are often less expensive over time than carrying a credit card balance due to more favorable rates.
Kinecta’s Signature Personal Loan4 offers you low rates, loan amounts from $1,000 to $100,000, and terms up to 84 months.
Personal Lines of Credit
A personal lines of credit (PLOC) is a revolving loan and falls somewhere in between a credit card and a personal loan. Like credit cards, they are a form of revolving credit, providing a convenient way to borrow money on an ongoing basis with a variable rate. And like a personal loan, you benefit from a more favorable interest rate.
Line amounts are typically higher than credit cards and since you only pay interest on the portion of the line you use, PLOCs can be a great choice when you need access to larger amounts of cash but aren’t sure of the total costs.
Choose a personal line of credit if you:
- Need extra funds for a project or emergency, but aren’t sure of the exact costs
- Don’t mind having different payment amounts each month
- Want to supplement irregular incomes or protect against overdrafts
PLOCs typically have lower interest rates than credit cards, but some lenders charge annual fees to have one.
Kinecta’s Signature Personal Line of Credit5 has no annual fee, amounts from $1,000 to $100,000 and the ability to easily transfer funds to your checking account in online banking.
Which should you choose?
Although there are many similarities and differences between credit cards, personal loans and PLOCs, one isn’t necessarily better than the other—it just comes down to your financial situation.
Each option can be used for things like:
- Consolidating higher-interest debt by transferring multiple balances into one account
- Building credit by making timely payments each month
- Paying bills or making purchases
Before borrowing, it's essential to consider your financial needs and repayment ability to choose the option that's right for you.
You can also speak with a Kinecta representative at any time to discuss your options in-branch, over the phone or by booking a virtual online appointment. We’re here to help.
1Myperks Terms & Conditions - click here.
2Mypower Terms & Conditions - click here.
3Myplan Terms & Conditions - click here.
4Signature Personal Loan. Subject to credit approval. Rates, loan amounts, and terms are based on standard underwriting factors. Maximum loan amount is $100,000. Minimum repayment term is 12 months, maximum repayment term is 84 months. Monthly payment per $1,000 borrowed at 9.74% APR (after automatic payment discount applied) over a term of 12 months is estimated to be $87.80, over a term of 84 months is estimated to be $16.47.
5Signature Personal Line of Credit. Subject to credit approval. Rates, loan amounts, and terms are based on standard underwriting factors. Maximum line amount is $100,000. Variable APR based on The Wall Street Journal Prime Rate (the “Index”) plus a margin. This variable rate may vary with changes in the Prime Rate.
Overdraft automatic transfers. If enrolled, the account will be subject to the interest rate on the loan.
Minimum Periodic Payment & Fees. Minimum periodic payment for lines of credit is 4% of the outstanding loan balance as of the date the billing cycle closes; however, it will not be less than $30.00 or the balance due, whichever is less. If the minimum periodic payment is more than 15 days late, a late charge of $20.00 will be assessed.