When it comes time to pay for an expense you don’t have the cash for upfront, you might reach for your credit card. However, depending on how much you owe and the terms and rates of your credit card, that might not be a wise idea.

One alternative to paying with a credit card is applying for a personal loan. Personal loans are either secured or unsecured and advance you, the borrower, a lump sum that you’ll pay off in installments over a set period.

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Personal loans are suitable to cover a variety of expenses, such as repairs, renovations, medical bills, debt consolidation or wedding or funeral expenses. Here are four reasons why a loan is better than a credit card.

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Lower Interest Rates

Erika Kullberg, an attorney, personal finance expert and founder of Erika.com, said one of the top reasons why a loan might be preferable to a credit card is because loans often have lower interest rates.

“Credit cards often come with high APRs, especially for those with average or poor credit scores,” said Kullberg. “In contrast, personal loans, especially if secured, tend to offer lower interest rates, resulting in reduced overall borrowing costs over time.”

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The average credit card interest rate is 22.75%, and the average personal loan rate is 12.35%, according to the most recent Federal Reserve data. Of course, if you have a credit card with a high limit and a 0% APR for 18 months and you can make equal payments to pay off your debt before the promotional interest rate expires, that’s a better deal than a personal loan with a 12% interest rate.

Fixed Repayment Terms

Kullberg said that loans typically come with fixed repayment terms, allowing borrowers to budget and plan for monthly payments more effectively.

“With a credit card, the minimum payment amount can fluctuate based on the outstanding balance, making it challenging to predict future financial obligations,” Kullberg said. “A loan provides stability and certainty, which allows for better financial planning.”

If you do choose to use your credit card for larger expenses, don’t use it for anything else until you pay it off to avoid increasing the balance.

Opportunity for Debt Consolidation

“For individuals grappling with multiple high-interest debts, such as credit card balances, a loan can offer an opportunity for debt consolidation,” said Kullberg. “By consolidating debts into a single loan with a lower interest rate, borrowers can streamline payments, simplify their financial obligations and potentially save money on interest charges over time.”