Prepayment penalty

Sometimes if you are fortunate enough to earn a handsome amount on your investments or a bonus and you plan to clear your liabilities through this earning, then personal loan could prove expensive. If you want you pre-pay the loan amount, there is a hefty fee known as the pre-payment penalty that is levied upon you. On the other hand, there is no such charge if you plan to clear the outstanding credit card bills with your sudden earnings. In fact in some cases banks do not even allow the pre-payment before certain period. This is practiced because banks do not want to lose on the interest they expect from you.

For this reason credit cards may be considered better as the entire outstanding amount could be wiped off at one go without paying a penalty.

Reckless spending

Although credit cards are convenient and an easy option you should never forget that overspending through them could lead you to a trap. If you continue spending and do not keep a check then it will sink into a debt trap. As your outstanding amount has been converted into a personal loan, you might begin happily shopping around again. Beware of such a situation as it will mount up your outstanding that will again have to be converted into a personal loan and as you already posses the earlier loan, this one would be a problem for you.