Credit Cards are of course loans but with some major differences to a standard bank loan. Overall, a credit card is more flexible than a bank loan which can make it cheaper in the long term despite the interest rates often being much higher than a standard loan. If you have no security for a loan the difference may be minimal anyway because the interest rate is based primarily on the risk the bank is taking.
The way you get your money from a credit card compared to a loan is quite different. With a loan you get the money you need as a lump sum paid to you when you take out the loan and straight away you pay interest on the whole amount. This means that if you want a loan to cover a variety of things such as expenses while you are a student or maybe for a business, you are paying interest on money you have borrowed before you even use it. The borrowed money simply sits in your bank waiting to be used while you pay interest for the privilege, which is of course far far higher than the interest you earn on the borrowed money from your bank account. With a credit card you have credit available to you for when you want it but you don't have to use the entire amount of the card. You can use all of it of course; some of it or none of it and you don't have to telephone the bank each time you want to increase what you are using. Providing you stay within your credit limit.
This is another major advantage of a credit card over a loan. Once you have been approved for the credit card, it is there for when you need it. It may be that you often have some weeks or months where your money doesn't quite stretch far enough or because you have bills requiring immediate payment getting a loan from the bank may simply take too long. Having a credit card means you can use it when you need it. This is ideal if you are self employed.
The other major issue with a normal bank loan is the strict way in which you have to make monthly payments. Often you will have to pay penalties for paying it off early, this of course isn't the case with a credit card you can pay it off as quickly as you like and also fairly slowly if you like. Typically the minimum monthly payment is 2% of the amount you owe or it may only be the interest you have to pay. Of course with a bank loan once you have paid an amount off you can't use it again and when you finish paying off the loan if you want the same loan again you will have to start over an possibly reapply for another loan. With a credit card you can pay it off and then keep it ready to be used when you want. You can increase and decrease the amount you are borrowing as you wish.
