How they differ
A loan gives you a fixed sum with a fixed repayment and end date. A card gives you a revolving limit with a minimum payment that can leave a balance outstanding for years.
When a card can be cheaper
A 0% purchase or balance transfer card can cost nothing in interest if you clear the balance before the offer ends. Watch for transfer fees and the rate that applies afterwards.
When a loan is better
- Larger amounts above typical card limits
- When you want a fixed end date
- If you are unlikely to clear a card within its 0% period
- To stop minimum payments stretching debt out
The discipline factor
A loan forces repayment on a schedule. If you consolidate card debt, consider closing or reducing card limits so balances do not build again.
Common questions
Does a loan or a card help my credit score more?
Both can help if managed well. Low card utilisation and on-time loan payments are both positive.
Can I pay a credit card off with a loan?
Yes. That is a common use of a debt consolidation loan.
This guide is general information, not personal financial advice. If you are worried about debt, free help is available from MoneyHelper, StepChange and Citizens Advice.