Credit Card vs. the Bank Loan: Which is Better?
Experts say that the annual percentage rate (APR) probably would be lower for a bank loan, even an unsecured loan, than most credit card rates. Compare the two. A credit card with a 19 percent interest rate versus a bank loan with a 15 percent rate would yield a savings of $70 over a three-year period of paying back a $1,000 loan. Not a great deal of money over a three-year period, although the savings can escalate when the amount of the loan increases.
If you really want to build up a credit history, it may be more advantageous to use a credit card to make the purchase. Make monthly payments on a timely basis and you'll build a credit history that will help you with financing in the future. Banks and other lenders who issue larger loans typically like to see the use of a major credit card because it is a good, historical measurement of your ability to follow through on payment obligations.
Be careful, though. Some lenders may look less favorably on borrowers who have more than a few credit cards.