Personal Loans vs. Credit Cards: A Statistical Comparison

Personal Lending
Written By Yoshi Mua

Introduction

Consumers often choose between personal loans and credit cards for financing needs. While both options provide access to funds, they differ significantly in terms of interest rates, repayment terms, and usage. This blog examines key statistics to compare these lending solutions.

Interest Rates and Costs

  • The average interest rate for a personal loan is 11.23%, while the average credit card interest rate exceeds 20.50%.

  • Personal loans typically offer fixed rates, ensuring predictable monthly payments, whereas credit card interest rates can fluctuate.

Borrowing Behavior

  • 32% of consumers use personal loans to consolidate high-interest debt from credit cards.

  • Personal loan balances reached $225 billion in the U.S. in 2023, an increase of 20% over five years.

  • Consumers with personal loans tend to have higher credit scores (average 720) compared to those who rely primarily on credit cards.

Conclusion

For those seeking predictable payments and lower interest rates, personal loans often provide a more favorable alternative to credit cards.

Citations

  • Federal Reserve Bank. (2023). "Consumer Credit Trends: Credit Cards vs. Personal Loans."

  • LendingTree. (2023). "Best Practices for Personal Loans and Credit Cards."

  • Experian. (2023). "Annual Credit Report on Consumer Borrowing."

Yoshi Mua https://www.muamedia.com
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