A personal loan and a credit card both put money in your hands, but the cost of repaying them is structured very differently. A personal loan has a fixed monthly payment, a fixed term, and a known total cost from day one. A credit card has a variable payment (you choose how much to pay each month), no fixed end date, and a total cost that depends entirely on how quickly you clear the balance. This makes them difficult to compare without running the numbers.
This tool runs the numbers. It shows the total cost, total interest, and clearance time for both a personal loan and a credit card at the same amount, with a 0% promotional rate toggle that shows what happens when the revert rate kicks in. If the monthly card payment entered is close to the minimum, the tool flags the minimum payment trap: the scenario where most of each payment goes to interest and the balance barely decreases. All figures are illustrative. This tool is for informational purposes and does not constitute financial advice.
At a Glance
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The tool compares total cost, total interest, and clearance time side by side. The credit card’s variable payment structure means the clearance time can range from months to decades depending on the monthly amount.
A personal loan’s total cost is fixed from the start: monthly payment multiplied by the number of months. A credit card’s total cost depends on the monthly payment, which can change. Paying more clears it faster and costs less interest. Paying the minimum stretches it out and costs far more. The tool shows both scenarios for the same amount so the structural difference is visible.
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The 0% promotional rate toggle shows what happens when the interest-free period ends. If the balance is not cleared by then, the revert rate applies to whatever remains.
A 0% purchase card can be the cheapest way to borrow if the balance is cleared within the promotional period. If it is not cleared, the remaining balance accrues interest at the revert rate (typically 20% to 25% APR), and the total cost can quickly exceed what a personal loan would have charged. The tool models both phases: interest-free clearance during the promo, then revert-rate clearance on whatever is left.
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If the monthly card payment is too low, the tool flags the minimum payment trap. This is the scenario where the debt takes years or decades to clear.
Credit card minimum payments are typically set at 2.5% of the balance or £5, whichever is higher. At these levels, most of each payment covers the interest and very little reduces the balance. A £3,000 balance at 22% APR with minimum payments takes over 25 years to clear and costs over £3,000 in interest: more than the original amount borrowed. The tool detects this pattern and flags it clearly.
Personal Loan vs Credit Card Cost Comparator
Enter the amount, loan details, and card details. Toggle the 0% promo switch if the card has a promotional rate. All figures are illustrative.
Personal loan
Monthly payment
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Total cost
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Total interest
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Time to clear
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Credit card
Monthly payment
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Total cost
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Total interest
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Time to clear
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Cost difference
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About this tool
Useful before a planned purchase where either product could fund it. Shows the total cost difference and, critically, how long the credit card takes to clear at different monthly payments.
Models the personal loan as a fixed-term annuity and the credit card as a month-by-month simulation where interest accrues on the remaining balance. The 0% promo toggle models both the interest-free period and the revert rate.
If the monthly card payment entered is close to or below the minimum payment level, the tool flags the trap: most of each payment goes to interest, the balance barely decreases, and clearance can take decades. This is the single most important output.
Credit cards offer Section 75 purchase protection on items between £100 and £30,000, and some offer cashback or reward points. These are non-cost factors the tool does not quantify.
How to use this tool
This is the total cost of the purchase or the amount you need. The same amount is used for both the loan and the card so the comparison is like-for-like. The range covers £500 to £15,000, which is the overlap zone where both products are commonly available.
Choose an illustrative APR and term for the personal loan. If you have run a soft-search eligibility check, enter the indicated rate. If not, 9% is a reasonable mid-range starting point. The loan calculation is fixed: the monthly payment and total cost do not change once set.
Enter the card APR (22% is a common starting point for standard cards) and the monthly payment you would make. Toggle the 0% promo switch if the card has a promotional rate, and set the promo length and revert APR. Try different monthly payment amounts to see how the clearance time and total cost change.
The side-by-side panel shows total cost and time to clear. The time bars visualise the difference. The verdict explains which is cheaper and why. If the card payment is too low, the verdict flags the minimum payment trap with the specific cost implications.
The minimum payment trap
Credit card minimum payments are typically set at the higher of 2.5% of the outstanding balance or £5. On a £3,000 balance, the initial minimum is £75. But as the balance decreases, the minimum decreases too. After a year of minimum payments at 22% APR, the balance may have fallen to around £2,400, and the minimum is now around £60. Most of each payment is covering interest, and the principal is barely moving.
The result is that a £3,000 balance at 22% APR, repaid at the minimum payment, takes over 25 years to clear and costs over £3,000 in interest: more than the original amount borrowed. The same £3,000 on a personal loan at 9% APR over three years costs approximately £432 in interest and is cleared in exactly 36 months. The loan costs less than a sixth of the card interest and clears in a seventh of the time.
The minimum payment trap exists because the payment amount shrinks alongside the balance, keeping it permanently close to the interest charge. A fixed payment of £100 per month on the same £3,000 balance at 22% APR clears in approximately 38 months and costs approximately £780 in interest: still more than the loan, but dramatically less than the minimum payment path. The card payment slider in this tool makes this effect visible by showing how the clearance time and total cost change as the monthly amount increases. The guide to personal loans vs credit cards covers the full structural comparison.
The 0% promotional rate: opportunity and trap
A 0% purchase credit card can be the cheapest way to borrow if the full balance is cleared within the promotional period. No interest accrues during the promo, so every pound paid goes directly to reducing the balance. A £3,000 purchase on a 12-month 0% card, repaid at £250 per month, is cleared in 12 months with zero interest. No personal loan can match this.
The trap is what happens when the balance is not cleared in time. If £1,500 remains when the 12-month promo ends and the revert rate of 22% APR kicks in, that remaining balance now accrues interest at the full rate. If the monthly payment stays at £100, the remaining £1,500 takes approximately 17 more months to clear and costs approximately £260 in interest. The total cost across both phases (12 months at 0% plus 17 months at 22%) may still be less than a personal loan, or it may be more. The tool models both phases to show the combined result.
The critical question for any 0% card purchase is: can you realistically clear the full balance within the promotional period? If yes, it is likely the cheaper option. If not, the personal loan’s fixed term and fixed cost may be the safer structure, because the total is known from the start and does not depend on payment discipline during the revert period. The guide to personal loans vs buy now pay later covers similar deferred-interest structures.
Related tools
Model the loan side independently at any amount, APR, and term.
If you already have card debt, this tool shows the saving from transferring it to a personal loan.
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Guides and tools covering secured loans, debt consolidation, and home improvementsFrequently asked questions
When is a credit card cheaper than a personal loan?
A credit card is cheaper when the balance is cleared quickly, either within a 0% promotional period (in which case no interest is charged) or within a few months at a fixed payment that is high enough to keep the total interest below the loan’s total interest. For small amounts (under £1,000), a credit card cleared within three to six months is almost always cheaper than a personal loan, because the loan’s fixed arrangement period and higher per-unit processing cost make it less efficient at small scale.
As the amount increases and the clearance period extends, the personal loan becomes increasingly competitive. At £3,000 and above, unless a 0% card is available and the balance will be cleared within the promo, a personal loan at a mainstream rate is typically cheaper than a credit card at a standard rate. The crossover depends on the specific rates, the amount, and the monthly card payment, which is why this tool exists.
What monthly card payment should I enter?
Enter the amount you would actually pay each month, not the minimum. If you would set up a standing order for £150 per month, enter £150. If you would pay the minimum each month, enter the minimum (approximately 2.5% of the balance or £5, whichever is higher). The tool will show the clearance time and total cost at that payment level, which reveals the cost of the minimum payment path compared to a fixed higher amount.
Trying different monthly amounts is the most useful way to use this tool. Moving the card payment slider from £50 to £200 shows how dramatically the clearance time and total interest change. A small increase in the monthly payment can reduce the clearance time by years and the total interest by hundreds of pounds.
Does this tool account for Section 75 protection?
No. Section 75 of the Consumer Credit Act gives credit card holders additional purchase protection on items costing between £100 and £30,000, making the card provider jointly liable with the retailer if the goods are faulty, not delivered, or the retailer goes bust. This protection does not apply to personal loans. The tool compares cost only. If Section 75 protection is important for the purchase (high-value goods, deposits, purchases from less-established retailers), this non-cost benefit should be weighed alongside the cost comparison.
One strategy is to make the purchase on a credit card to secure Section 75 protection, then immediately transfer the balance to a personal loan at a lower rate. The protection attaches to the transaction, not the ongoing balance. The guide to personal loans vs credit cards covers this partial-payment strategy in detail.
What happens if I miss a card payment during the 0% period?
Most 0% promotional rate offers include a condition that the promotional rate is withdrawn if a minimum payment is missed. If the borrower misses a payment during the 0% period, the card provider may revoke the promotional rate and apply the standard purchase rate (or a penalty rate) to the full remaining balance, backdated in some cases. The total cost in this scenario is significantly higher than the tool models, because the tool assumes the promotional rate is maintained for the full stated period.
This risk is one of the structural differences between a personal loan and a 0% card. The personal loan’s cost is fixed regardless of whether a payment is missed (late fees and credit file damage apply, but the rate does not change). The 0% card’s cost advantage is conditional on perfect payment behaviour throughout the promotional period.
Can I use this for an existing credit card balance?
This tool is designed for comparing the cost of a new purchase funded by either a loan or a card. If you already have a credit card balance and want to see whether transferring it to a personal loan would save money, the credit card to personal loan calculator is the more appropriate tool. It models the existing balance, the card’s current rate, the loan rate, and shows the net saving from transferring.
The principles are similar (lower rate over a fixed term typically beats a higher variable rate with flexible payments), but the starting point is different: this tool assumes the amount is being borrowed for the first time, while the transfer tool assumes the debt already exists and the question is whether to restructure it.
Squaring Up
A personal loan and a credit card structure the cost of borrowing very differently. The loan is fixed: a known monthly payment, a known term, a known total cost. The card is variable: the monthly payment, the clearance time, and the total cost all depend on how much is paid each month. For small amounts cleared quickly, a card (especially a 0% card) is often cheaper. For larger amounts over longer periods, the personal loan’s fixed structure and lower rate typically win. The minimum payment trap is the single most important risk to understand: a small monthly payment on a credit card can turn a £3,000 purchase into a £6,000 commitment over 25 years.
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Everything in one place, across secured loans, debt consolidation, and home improvementsThis tool is for illustrative purposes only and does not constitute financial advice. All loan and credit card rates are illustrative and do not represent any specific lender or card provider. Credit card minimum payments are modelled at the higher of 2.5% of the balance or £5, which reflects the typical UK minimum but may differ by provider. Section 75 protection, cashback, and reward benefits are not modelled. The rate offered on any personal loan depends on the borrower’s credit profile, income, and the lender’s own criteria. Missed repayments can affect your credit rating and may result in further action.
