Loans vs Credit Cards: The Benefits & Drawbacks for Your Healthcare Business

Updated on October 25, 2022

If your healthcare business is in need of money, you might be considering taking out a loan, or maybe getting a credit card. Both of these are efficient ways to get hold of money when you need it. However, both of these are very different things. 

A loan is something that you can get from a lender as well as many other places all around the world. Credit cards can come from multiple sources too, banks, credit unions, and so on. But, a credit card has multiple differences from a loan. 

Each of these has its own benefits and drawbacks. So, in order to define which is best for you, it is essential to look at the pros and cons and see which one has cons that are less of a problem for you. 

In this instance, we will consider personal loans more than other loans, as these are the most popular loans in the U.S. thanks to their versatility.

What Is A Loan?

Loans are sums of money granted to you by a lender in exchange for repayment as well as a payment of interest upon the gross amount you receive. Lenders will offer you a wide array of options for a loan which will affect the terms of your credit. 

Your credit score will affect your eligibility for a loan and can even prevent you from getting a loan in some cases. 

Mortgages are loans, as are student loans, auto loans, and personal loans, among many others. Some types of loans will have a specific use, such as a mortgage or auto loan, alternatively, personal loans often do not, although lenders can be against certain uses.

What Is A Credit Card?

Credit cards are still a form of borrowing like a loan is, but they are of a different class. These are known as revolving credit, whereas loans are not. Revolving credit is when the borrower has ongoing access to funding, as long as their credit account has good standing. 

You have access to a specific amount, like with a loan, however, you do not get the funds in full. Instead, you can take funds from your credit card account whenever you need to until you reach the maximum limit.

Credit cards come in many shapes and forms. The best will sometimes offer a 0% period of introductory interest rate, as well as rewards. However, some can have a high-interest rate as well as additional fees. 

Understanding Credit Scores

One of the few similarities between credit cards and loans is that they are both affected by your credit score. If you have a good credit score you will be eligible for most loans and credit cards and will receive a better interest rate.

However, if you have a bad credit score, you may not be eligible for some credit cards or loans, and your interest rate is likely to be higher. 

Credit scores are based on your financial history, this can include your accounts, any balances you have outstanding, inquiries, as well as defaults on credit payments. 

Every person will get a credit score based upon this, and this will affect how eligible they are for being approved for credit. All factors a lender will consider will also likely influence the interest rate that they get.


With all this in mind, we need to look at what is good and what is bad about loans. Every type of loan will have different pros and cons. Secured and unsecured loans will have their own pros and cons, for example. 


  • Loans are often best for large sums of money needed for large purchases such as cars, homes and expensive appliances. 
  • Loans will provide you with the money that you need in one lump sum, which is ideal for emergencies. 
  • Loans come in many shapes and forms, there are different types of loans with different durations. You can get short term or long term loans to suit your situation.
  • There are multiple types of loans. You can get loans specific to certain needs, or loans that are more lenient (such as personal loans).


  • Loans will often require fees, such as service fees, and other additional fees that accumulate and raise the overall cost of the loan. 
  • Some loans are secured. These loans use the property as collateral. This means if you default on the loan, and do not repay the loan in a specific time period, then your home, car, or other property can be seized as a result.
  • Your credit score plays a late part in the loans that you can get. You may not get what you want due to this. You can end up with high-interest rates or may not get the loan you wanted at all due to a poor credit score.

Credit Cards

Just like loans, credit cards also come with pros and cons. These pros and cons are different to loans, but there are some similarities. 


  • Having an ongoing credit that is revolving such as a credit card means you are only charged an interest rate when funds are used.
  • If you have good credit you can get a credit card with a 0% introductory period with 05 interest rates, you can also get grace periods and rewards. Though, your credit score has a part to play in this. 
  • If you have an account that has good standing then you can be eligible for an increase on your credit limit on a regular basis. 
  • If you have poor or limited credit, credit cards allow you to build up a better credit score and history over time.


  • Credit cards will usually have interest rates that are higher than loans, especially personal loans, although some loans can be higher. 
  • Much like with loans, credit card fees and interest rates add up meaning you do pay back more than you received.