 TITLE: Is Personal Loan Debt Better Than Credit Card Debt? CONTENT: When to Use a Personal Loan\n---------------------------\nA personal loan is an installment loan. With this type of loan, you borrow a set amount of money for a specific amount of time and make fixed monthly payments (\"installments\") until the loan is paid off. Once the loan is paid in full, it's considered closed; if you want to borrow more money, you have to apply for a new loan.\nYou can get personal loans from banks, credit unions or online lenders, and use them for any purpose you want. Some people use personal loans to pay for vacations, home renovations and weddings. Others take out personal loans to pay off other debts. For instance, you might take out a personal loan to pay off a large credit card balance at a lower interest rate, or to consolidate a lot of different debts into one monthly payment. (This type of personal loan is called a debt consolidation loan.)\nWhat are some of the benefits of personal loans compared with credit cards?\n*   You have fixed monthly payments, which makes it easier to budget.\n*   If you have a good credit score and stable income, you can generally get a personal loan at a lower interest rate than a credit card. While interest rates vary widely, personal loans can currently be found with interest rates as low as 6%.\n*   Personal loans generally go up to $50,000, more than the average credit card limit.\n*   You get a lump sum of cash, so you can pay companies or individuals that don't accept credit cards.\nHowever, personal loans can have some downsides too:\n*   Fixed monthly payments mean less flexibility than you have with credit cards. Even if you're short of cash one month, you still have to make your full payment.\n*   You have to pay origination fees (a percentage of the total loan amount) to take out a personal loan.\n*   Paying less than the full monthly loan installment may be reported as a late payment to credit reporting agencies, hurting your credit scores. You may also be charged fees for late or partial payments.\n*   If you want to pay off the loan before its end date, you might have to pay a prepayment fee.\nWhen considering a personal loan, always compare a wide variety of lenders and be sure you understand all the costs involved, including the interest rate, origination fees and any other fees or penalties. END