The Monetary Authority of Singapore (MAS) reported that card billings hit an all-time high in 2021 with an estimated value of 64 million SGD – a whopping 27 per cent increase over 2015! But did you know that there is an unlikely alternative to your credit card spending?

Here are three reasons why personal loans may be a better option than using your credit card for purchases, so you have another option besides using credit.

Reason 1: Making big purchases? Personal loans are better

Are you thinking about buying that computer you've always wanted? That brand new luxury watch? Perhaps beginning a major home improvement project? Instead of using a credit card, you should apply for a personal loan.

According to MAS, banks will give you a credit limit of up to four times your monthly income. If your credit limit is insufficient or you need money quickly, personal loans, unlike bank credit, provide you with a larger pool of cash to spend from. Singaporeans can borrow up to twelve times their monthly income for unsecured loans such as personal loans, according to, making personal loans a better line of credit for big purchases!

Reason 2: Personal loans help you pay less interest

Although interest rates on credit cards and personal loans vary depending on individual agreements with banks and financial institutions, there is one significant difference that makes one credit option superior to the other. The general consensus is that personal loan interest rates are much lower than credit card interest rates. Hence if you're looking to pay off a large amount over time, lower interest rates from a personal loan will lighten that repayment burden for you!

Reason 3: Minimise unexpected spending with personal loans

Have you ever felt like once you get a credit card, you can suddenly afford a lot more? You're not the only one who feels this way. According to Inverse, due to the phenomenon of 'transactional decoupling’', credit cards make you feel like you have more disposable cash and cause you to spend more.

What is ‘transactional discoupling’?

‘Transactional decoupling’ refers to a phenomenon where people “don’t actually pay for something the second [they] buy it”. This frequently occurs when using a credit card because it takes time for a transaction to appear in one's bank account.

When money is spent, there is a time lag and it is difficult to visually track spending despite the fact that, in today's world, these things are assumed to be easily tracked online. At any single point in time when one spends and then checks, the total weight of spending may appear lower because of how total real-life transactions take time to be recorded in the bank.

Why people spend more with credit cards

Despite how banks try to help you manage your spending by, for example, providing easy access to your spending records through apps, the fact remains that the 'pain' of paying is still delayed for consumers due to this time lag through ‘transactional discoupling’. And when you can't see the magnitude of your spending right away, you spend more (and get yourself into deeper debt!).

What makes personal loans different?

Because your debt is tied to the amount you borrow and the monthly payments you'll have to make, personal loans make it easier to keep track of your debts.

Rather than having to calculate the total amount you owe your credit card company on a regular basis, the debt you'll owe your bank will remain consistent. You'll be able to take out a specific amount of money from your personal loan and stick to a predetermined and predictable budget – making it easier to manage your finances, spending, and overall repayment.

Should I replace my credit cards with personal loans then?

Not at all! You can simultaneously depend on either credit cards or personal loans depending on your spending habits and goals. To help you decide whether to switch from credit cards to personal loans, check out this overview of the advantages and disadvantages of using either a credit card or a personal loan for your purchases.

If you're already convinced that personal loans are the best option for you, head on over to Lendela's loan comparison platform for personalised loan offers from a variety of banks and financial institutions, free of charge!