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Personal Loan vs. Credit Card for Holidays: Which is Best?

Holiday spending can add up quickly, especially if there are a lot of people on your Nice list. But the season of giving does not have to be overwhelming. Finding the right way to pay for gifts can help your pocketbook as well as relieve some of the stress of holiday spending. In this blog, we will compare personal loans and credit cards so you can decide which is best for your holiday spending if you need to borrow money.

Save Early for the Holidays

While it may be too late to start saving for the holidays this year, now is a great time to start for next year. Creating a budget each January will not only provide you with a savings target but also give you peace of mind that you have a plan for the holidays. A good tip is to get yourself organized by creating a list of people to whom you will be gifting to get a general idea about how much you will want to spend, says

Of course, if you need to borrow money, the two main options are a personal loan or a credit card. Each has its pros and cons. Read on to learn more about each of them.

Personal Loans

A personal loan can be a smart and convenient way to borrow money, not just for the holidays but for other projects that need funding throughout the year. Personal loans are a type of installment loan that lets you borrow a lump sum of money and pay it back with fixed monthly payments over a period of time, such as 12 or 24 months.

With a personal loan, you will receive the cash upfront after you are approved. You will know how much your monthly payments will be, when they are due and when you will pay off the loan. According to, personal loans usually have lower interest rates than credit cards, which can save you money.

One disadvantage to personal loans is that you will need to know how much you want to borrow for holiday spending. Another is that personal loans do not offer any spending rewards, a feature that is found on some credit cards. Plus, you are unable to borrow from the same loan while paying it off because it is not a revolving line of credit.

Credit Cards

Another borrowing option for your holiday spending are credit cards. A credit card is a revolving line of credit that lets you purchase items up to your available balance. To pay it back, you will make minimum monthly payments, although it is wise to pay more than that each month. You can borrow up to your available limit, pay it off or pay it down, and borrow from it again.

Credit cards can be a good way to pay for holiday gifts if used wisely. Since they tend to have higher interest rates than personal loans, you may end up paying much more if you do not pay off your balance right away, according to

There are a few things to look for in credit cards that can save you money. The first are 0% APR introductory offers. You can use the zero-interest period to pay off your holiday spending debt, thereby avoiding paying any interest on the borrowed money.

The other thing to look for in credit cards are rewards programs. In these programs, you earn points for purchases that later can be redeemed for cash, merchandise, travel and more. During the holidays, some lenders may double or triple the rewards, which can make your holiday spending even more rewarding.

Other Ways to Pay

Ideally, you should not get into debt to pay for holiday gifts. As mentioned earlier, saving money throughout the year is better for your financial wellness. There are many types of savings accounts that can help you grow your money. These include high-yield money market accounts (MMA) or certificates, says

TCU Can Help

Whether it is borrowing money or saving it for the holidays, Travis Credit Union can help. Our personal loans can provide you with the funds you need, while our Platinum Visa credit card comes with a rewards program to make shopping more rewarding.

TCU also has an array of money market accounts and certificates that offer high yields to help you reach your savings goals. Plus, you can save automatically when you enroll in our free direct deposit program and set aside a certain amount toward your holiday savings each payday.

We are here to help you borrow better. For all your financial wellness needs, visit or a branch near you. Happy holidays!

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