Credit Card or Personal Loan

Credit cards and personal loans both are very much similar to each other as they both are forms of unsecured debt. They both offer different features and interest rates. Dedicated monthly repayments (EMIs for a personal loan and monthly payments for a credit card) are required in both cases.

For short-term expenses Credit cards are ideal and if you are going for long-term expenses then personal loans are best, financing a big purchase or consolidating multiple debts.

The decision of going for a credit card or a personal loan depends on a few key factors like the type of expenses, the amount you need to borrow, and loan tenure.

Difference between Personal Loan and Credit Card

By looking at the following comparison, you shall get an idea or help to decide whether a credit card or personal loan would suit your requirement.

 Basis Personal Loan Credit Card

Type of Purchase

  • Reliable for bigger purchases. It is suitable when you want to make a down payment for a house or a car or debt consolidation and payment of unexpected medical bills.

  • Reliable for even medium long-term borrowing.

  • When you apply for a home loan, your eligibility is primarily dependant on your income and repayment capacity. Factors determine your home loan eligibility –Your age, financial position, credit history, credit score, other financial liabilities, etc.

  • Reliable for short-term borrowing. Ideally, it should be paid off before the due date.

Interest Charged

  • The interest charged is lower than that on a credit card with a longer repayment period

  • You can easily negotiate for a lower interest rate if you have a good credit score

  • If the repayment is done before the end of the interest-free period and there will be no interest charged on it.

  • High-interest rates of 30% or above on unpaid balances.

  • The lower interest rate for individuals with good credit score


Age proof, address proof, and salary slips

Age proof, address proof, and salary slip required when applying for the card.

Processing Time

For loan sanctioning, it almost takes 3-4 days once you submit the documents. Apply for a personal loan with
Finbucket within minutes and the bank usually deposits the money into your account already.

For loan sanctioning, you don’t have to wait much as the loan sanctioned easily. The amount is usually deposited into your account.


It involves processing fees, prepayment charges, and service fees as per the lender’s rules and regulations.

As a credit cardholder, you may be charged a joining fee and a separate annual fee from the second year onwards. Additional fees may be applicable for EMI conversions and loan on credit card offers.

Impact on CIBIL Score

Multiple loans can adversely affect your credit rating

In case you of exceeding credit limit then it can hurt your credit score.

Additional advantages

Interest with lower rates helps in consolidating multiple debts.

Credit cards follow a cycle where the available credit increases as you repay the outstanding debts of your car.

Considerable Things

If you often miss out on EMI due dates or slow in repaying debt, then dragging the loan over a long tenure would increase your interest outgo on the personal loan.

  • Multiple small payments can be repaid via credit card if you borrowed any loan

  • Payment of credit bill can be converted into EMI options. Therefore, card issuers have specific rules and regulations regarding the EMI conversion of credit card debt.

*The details are indicative and subject to change from time to time as per RBI regulations and internal.

From the above Informal, in it is clear that both credit cards and personal loans offer you a range of benefits, so all that matters when deciding which to get is in fact directly co-related to your requirement.