 TITLE: How to Choose Between a Personal Loan and a Credit Card CONTENT: How Do Credit Cards Work?\n-------------------------\nCredit cards are a type of revolving credit. Whereas installment loans let you borrow a set amount of money and repay it over a specific term, credit cards let you borrow up to a certain limit, repay it and reborrow repeatedly.\nYou only pay interest on what you borrow if you carry a balance to the next month. When you do carry a balance, credit card issuers require you to pay at least a minimum amount every month.\nSay you have a new credit card with a limit of $10,000. If you charge $2,000 on it for a car repair but pay off the balance before the end of your monthly billing cycle, you won't owe any interest. But if you can't pay it off in full, your remaining balance will carry to the next month and you'll owe interest when your statement comes due.\nBe aware that monthly minimum payments may seem manageable, but if you only ever pay the minimum, it can take a long time to get out of debt—especially if the interest rate is high. That's because unlike a personal loan, credit cards don't have a set term by when the full balance has to be repaid. This means the repayment process is more flexible than with loans, but takes discipline to fully pay off. END