Personal loans vs. credit cards: Which is better as interest rates drop?

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Deciding between personal loans and credit cards as rates fall depends on your financial situation. Getty Images
Americans are carrying more debt than ever. In the second quarter of 2024, nationwide credit card debt hit a record $1.14 trillion, while personal loan debt reached $245 billion. These high numbers reflect the steep borrowing costs of recent years.
But inflation is cooling down, and many experts are now adjusting to what could be a series of Federal Reserve interest rate cuts. This shift could make borrowing more affordable.
So, which option is better as rates fall: personal loans or credit cards?
The answer isn’t straightforward — it depends on your situation.
Henry Yoshida, certified financial planner and co-founder of Rocket Dollar, explains,