Big expenses come with big decisions. If you are planning a home renovation, covering medical bills, consolidating debt, or preparing for a major purchase, one of the first questions is how to pay for it.
Personal loans and credit cards are common financing options for these situations. Both can give you access to funds, but the way they work and the impact they can have on your financial future are very different. At Colonial, we offer both personal loans and credit cards, so we see firsthand how Texans weigh these choices.
This guide breaks down the pros and cons of each, shows you how they compare, and explains when one may make more sense than the other. We will also walk you through how to get a personal loan or how to get a credit card with Colonial, so you can make the right decision for your financial situation.
A personal loan is an installment loan. You borrow a lump sum upfront and repay it over time in equal monthly payments. Colonial’s personal loans are available for various needs, from consolidating credit card balances to financing a large purchase.
Key features of Colonial personal loans:
Because payments are fixed, you know exactly how much you will owe each month until the loan is paid off. That structure helps borrowers stay on track and avoid lingering debt.
A credit card gives you a revolving line of credit. Rather than receiving one lump sum, you can borrow as much or as little as you need, up to your credit limit. As you pay down the balance, the available credit becomes available again.
Colonial credit card options include Mastercard® Platinum, Mastercard® World, and Visa® Platinum. Depending on the card, you may receive:
Credit cards offer flexibility, but balances can become challenging to manage if interest charges build up over time.
When weighing a personal loan against a credit card, the first thing many people notice is the cost of borrowing. Interest rates, introductory offers and the way those costs accumulate over time can create very different outcomes depending on which option you choose:
For Texans who expect to carry a balance on a large expense, a personal loan may reduce the overall cost compared with revolving debt on a credit card.
The way you repay borrowed money shapes how it fits into your monthly budget. Some people prefer the certainty of knowing exactly what they owe each month, while others like the flexibility to adjust payments as circumstances change.
Looking at repayment structures side by side shows how each product influences not just your cash flow today but your overall debt picture in the years ahead:
Some borrowers prefer the flexibility of credit cards, while others value the discipline of fixed installment payments.
Another key difference between personal loans and credit cards is how you actually receive and use the money. For some needs, it makes sense to have one large deposit all at once. In other cases, borrowing in smaller amounts over time feels more practical.
Thinking about how and when you’ll use the funds can help you decide which approach is better suited to your situation:
For example:
Beyond interest rates, borrowers also face fees and policies that can add to the total cost of credit. These can include annual fees, penalties for late payment or charges for early loan repayment. Some lenders keep their fee structures simple and transparent, while others may add costs that are easy to overlook.
Both personal loans and credit cards affect your credit profile, but they do so in different ways. Lenders look closely at your payment history, your total debt and how you manage the accounts you already have. The way you use each type of credit, whether it’s a fixed-term loan or a revolving credit line, can raise or lower your score over time.
A personal loan can offer structure and stability when you know exactly what you need to borrow and want a clear path to paying it off. Because the loan amount is set upfront, you don’t risk overspending the way you might with an open credit line.
If you’re deciding whether this route makes sense, here are a few situations where a personal loan may be the stronger option:
At Colonial, borrowers use personal loans for home projects, major purchases or paying down multiple high-interest debts at once.
Credit cards are designed for flexibility, making them a good fit when expenses are spread out or when you want the option to pay in full without interest. They also come with added features such as rewards programs, travel benefits, and purchase protections.
If you’re confident in your ability to manage balances responsibly, a credit card can offer both convenience and value, especially when:
Colonial’s Mastercard® World card, for example, offers points redeemable for gift cards, merchandise or travel. Those rewards can add extra value for someone who manages their balance carefully.
Whether you’re consolidating debt, funding a home improvement project or covering unexpected costs, the process with Colonial is designed to be simple and transparent. Here’s what the journey typically looks like:
Colonial makes the process of securing a credit card clear so you can choose the card that best matches your needs and start using it with confidence. Here’s how the application process works:
Personal loans and credit cards are not the only ways to handle big expenses. Depending on your financial situation, there may be other forms of credit that are worth exploring, such as the following:
If you own a home with sufficient equity, you may qualify for a home equity line of credit (HELOC), which allows you to borrow against your equity as needed. HELOCs often carry lower interest rates than unsecured credit because your home serves as collateral.
Like a credit card, a personal line of credit offers revolving access to funds up to a set limit. However, it typically comes with different interest rates and repayment structures. This can be a good option if you expect ongoing expenses but prefer the flexibility of drawing funds only when you need them.
Deciding between a personal loan and a credit card comes down to the nature of your expense, your repayment habits and your financial goals. A personal loan may serve you best if you need structure, predictability and lower interest on a large purchase. If you want flexibility and can pay balances in full each month, a credit card may be the right fit.
At Colonial, we provide both options to customers throughout Texas and across the country, with transparent terms and a focus on helping you make the choice that supports your long-term financial health.
When you’re ready to apply for a personal loan, open a credit card or simply talk through your options, Colonial makes the process clear and convenient. Our team is here to guide you, answer your questions, and help you choose the solution that supports both your immediate needs and your long-term goals.
Visit your nearest Colonial banking center or contact us to take the next step with Colonial today.
