Which is better: a personal loan or a credit card? It depends on what you plan to use it for.

As doctors, both of these can be useful for various needs like paying for exam fees, relocation, unexpected medical bills, and daily expenses, but knowing which is best for which need is important to your long-term financial stability and success.

Let’s learn more about these options and how to choose the best one for your needs.

Personal Loan

A personal loan is a lump sum of money borrowed from a lender, typically with a fixed interest rate and repayment term. Personal loans offer predictable monthly payments and often have lower interest rates compared to credit cards, making them a solid choice for long-term financial goals.

When should I use a personal loan?

Personal loans can be used for a variety of uses, but they are best for larger, long-term financial needs like:

• Residency relocation costs
• Home improvements
• Medical bills
• Debt consolidation

Pros & Cons of Personal Loans

Pros:

• Lower interest rates than the average credit card rate
• Known end date for debt payoff

Cons:

• Requires good credit for the best terms
• May have prepayment penalties
• Not ideal for ongoing expenses

Credit Card

A credit card is a type of revolving credit, meaning you can borrow up to a certain limit and repay the balance over time. Credit cards offer flexibility, rewards programs, and can help build credit if used responsibly (which can be especially important for residents and young doctors).

When should I use a credit card?

Credit cards can be used for many financial needs but are best for smaller, ongoing expenses for those who can pay off the balance in full each month. Keeping a balance on a credit card month over month can lead to toxic debt and be challenging to overcome. We recommend only using a credit card when you can pay it off in full each month.

Pros & Cons of Credit Cards

Pros:

• Flexible spending and repayment
• Opportunity for rewards or cash back
• Helps build credit card with responsible use
• Won’t owe interest if you pay it off each month

Cons:

• Higher, variable interest rates, which can be damaging if carrying a balance
• Risk of rapid accumulation of debt
• May have annual fees

Should I use a personal loan or a credit card?

If you need a large sum of money for a specific purpose and plan to pay it off over many months or years, a personal loan may be the right option for you. If you want more flexibility in your spending and can pay off your balance each month, a credit card could be better for your needs.

The choice between a personal loan and a credit card comes down to your financial goals, creditworthiness, and spending habits.

Will I save money with a personal loan?

Because personal loans often have lower rates and better terms, you may be able to save money by using a personal loan rather than a credit card. Our Credit Card Vs. Personal Loan Calculator allows you to see just how much you can save. Try it now!

Looking for a personal loan?

Panacea Financial offers PRN Personal Loans built just for doctors’ needs. They are designed to meet the unique needs of students, trainees, and practice doctors during a critical time in their careers.

Features of the PRN Personal Loan include:

• No hard credit check (Your credit score will not be affected by applying.)
• No cosigner requirement
• No prepayment penalties
• Quick, digital application

How do I apply for a personal loan?

If you have decided a personal loan from Panacea Financial is the right choice for you, it’s time to apply! Begin the process on our PRN Personal Loan page.

No matter what your needs are, we are here to help you succeed at every step of your career. Explore our other Resources for more tips and information you should know.