In today’s financial world, credit cards can be a valuable tool for more than just everyday purchases. Many credit cards offer flexible terms that make them viable alternatives to traditional personal loans. If you’re looking for the best credit card to help fund a personal loan quickly and with minimal hassle, this guide covers the top choices, features, and things to consider.
Benefits of Using a Credit Card for Personal Loans
Credit cards that provide low introductory APRs and high credit limits are especially useful for personal loans. They can offer benefits such as lower interest rates during introductory periods, flexible repayment plans, and rewards that can help offset loan costs.
What to Consider When Choosing a Credit Card for a Personal Loan
Before selecting a credit card for a personal loan, examine factors like:
- Interest Rates: Look for low or 0% introductory APR offers.
- Fees: Consider annual fees and transaction fees.
- Rewards: Some cards offer cashback or points that can reduce loan costs.
- Credit Limit: Ensure the limit is sufficient for your loan needs.
Top 10 Credit Cards for Personal Loans
#1 American Express Cash Magnet® Card
The American Express Cash Magnet® Card is ideal for personal loans due to its introductory 0% APR period. This card offers cashback on purchases, making it a good choice if you plan to repay your loan while enjoying some rewards.
#2 Chase Freedom Unlimited®
With a 0% APR on purchases and balance transfers for the first 15 months, the Chase Freedom Unlimited® is a great option for personal loans. Additionally, it offers unlimited cashback, which can be applied toward the loan balance.
#3 Citi® Diamond Preferred® Card
The Citi® Diamond Preferred® Card stands out for its long 0% APR period on balance transfers and purchases, which can make a big difference for personal loan repayment.
#4 Discover it® Cash Back
Discover it® Cash Back offers a 0% APR on purchases for 15 months and includes cashback rewards. For those considering a personal loan through a credit card, this is a versatile option with rewards that add extra value.
#5 Capital One Quicksilver Cash Rewards Credit Card
Capital One Quicksilver offers a straightforward rewards system with 1.5% cashback on all purchases. Its 0% introductory APR on purchases and balance transfers makes it a strong option for personal loans.
#6 Wells Fargo Active Cash® Card
Wells Fargo Active Cash® provides a 0% introductory APR and unlimited 2% cashback on purchases, combining both loan suitability and generous rewards.
#7 U.S. Bank Visa® Platinum Card
The U.S. Bank Visa® Platinum Card is known for its low APR and long-term financing options, making it a solid choice for personal loans. Although it lacks rewards, it provides straightforward borrowing options.
#8 Bank of America® Customized Cash Rewards Credit Card
This card allows you to customize rewards and offers a 0% APR on purchases and balance transfers for 15 billing cycles, ideal for using it as a personal loan tool.
#9 PenFed Power Cash Rewards Visa Signature® Card
PenFed’s Power Cash Rewards card offers 1.5% cashback on purchases and competitive rates. Its low APR and membership benefits make it a great option, especially for military members.
#10 Blue Cash Preferred® Card from American Express
The Blue Cash Preferred® Card offers high cashback rates on groceries and transit, and a 0% introductory APR, which can help offset some costs associated with using the card as a loan.
How to Use a Credit Card for Personal Loans
- Choose a Card with a Low APR: Start with a credit card offering 0% introductory APR.
- Plan for Repayment: Set a timeline for repayment within the low-interest period.
- Pay More Than the Minimum: Avoid high-interest charges by paying more than the minimum monthly amount.
Pros and Cons of Using a Credit Card for a Personal Loan
Pros:
- Quick access to funds
- Introductory APRs reduce interest costs
- Possible rewards and cashback
Cons:
- High interest if not repaid within the intro period
- Potential impact on credit score if balances are high
Alternatives to Using a Credit Card for Personal Loans
- Personal Loans: Traditional loans with fixed interest rates.
- Credit Union Loans: Often lower interest rates for members.
- Peer-to-Peer Lending: Platforms that connect borrowers directly with investors.
Conclusion
Finding the best credit card for personal loan purposes involves comparing APR rates, rewards, and fees. With options like the American Express Cash Magnet® and Citi® Diamond Preferred® cards, you can choose a credit card that offers manageable terms for personal loans.
FAQs
- What is the best credit card for a low-interest personal loan?
The Citi® Diamond Preferred® Card offers one of the longest 0% APR periods, making it ideal for low-interest personal loans. - Can I use any credit card for a personal loan?
Most cards can be used for loans, but choosing one with a low APR is best to minimize interest charges. - Are credit cards a good option for personal loans?
They can be, especially with a 0% APR offer. However, they require discipline to avoid high-interest fees after the introductory period. - What happens if I miss a payment?
Missing a payment can lead to fees and a higher interest rate, so it’s essential to make payments on time. - Are there fees for using a credit card as a loan?
Some cards have transaction fees, so review terms to understand any additional costs.