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Credit Cards vs Personal Loans

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There are numerous credit options available to us nowadays and at times it can get confusing as to which would be best for our specific needs. Both credit cards and personal loans have their various benefits. Let’s take a look at each.

How does a credit card work?

A credit card provides you with a revolving credit facility, you won’t have a fixed number of repayments and the line of credit is automatically renewed to your credit limit as you repay. Your credit limit is determined by your credit record and financial profile, as well as the limits set by the credit institution that you make use of. Every month you’ll need to pay back a minimum percentage of the amount spent on the card.

Credit cards are unsecured debt, which means you’re not reliant on providing assets or other goods to be held as collateral.

Credit cards can be very useful and efficient especially if you can pay off what you’ve spent in the month. They can come in very handy for unexpected costs or regular costs such as groceries, and other short term needs.

How does a personal loan work?

Personal loans offer one of the simplest ways to acquire a larger sum of money while enjoying a set repayment over a specific term. These loans are often unsecured, and interest rates vary depending on your personal financial profile and other factors that the credit provider takes into account.

Choosing an option with a fixed interest rate means that you won't be in for any surprises along the way, your repayments won’t fluctuate and this allows you to effectively manage your budget.

Personal loans can be used for anything, from home renovations to consolidation of debts and everything in between.

Credit Card vs Personal Loan

Whilst this is sometimes billed as a highly anticipated boxing match between the two products, in reality it is not a contest. Instead, you have the choice to select the best solution depending on your needs and preferences.

If you regularly need to make use of fluctuating amounts of credit, a credit card and the revolving facility it offers could be best for you. Bear in mind, you’ll need to be disciplined on repayments to get the best out of it.

Personal loans can also cover various amounts, but as a one off deal. They are better suited for expenses that would be difficult to pay outright. The fixed rates and flexible terms allow you to budget effectively and do things today that may have taken years of saving to achieve.

Apply for a DirectAxis personal loan today.


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DirectAxis is a business unit of FirstRand Bank Limited, an Authorised Financial Services and Registered Credit Provider, NCRCP20. Direct Axis SA (Pty) Ltd, Reg no. 1995/006077/07, an authorised Financial Services Provider, FSP7249 & FSP5. 108 De Waal Road, Diep River 7800.

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Loan repayment terms range from 24 to 72 months. The maximum interest rate with regards to a DirectAxis Personal Loan is 26.25% per annum (compounded monthly). The initiation fee is based on the loan value up to a maximum of R1 207.50. Your interest rate will be determined according to your personal risk profile.

An illustrative example of a loan at an interest rate of 26.25% per annum would be: Loan amount R50 000 plus a once-off initiation fee of R1 207.50 and a monthly admin fee of R69.00, over 72 months.

The total cost of the loan will be R 107 130.34 which is a maximum Annual Percentage Rate (APR) of 29.49%.