Credit cards and personal loans both are very much similar to each other as they both are forms of unsecured debt i.e. collateral for either. 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 credit card or a personal loan depends on few key factors like type of expenses, amount you need to borrow and loan tenure.
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.
|Personal Loan||Credit Card|
Age proof, address proof and salary slips
Age proof, address proof and salary slips required when applying for the card.
For loan sanctioning, it almost takes 3-4 days once you submit the documents. Apply for personal loan with
For loan sanctioning, you don’t have to wait much as the loan sanctioned easily. The amount usually deposited into your account.
It involves processing fee, prepayment charges and service fee as per the lender’s rules and regulations.
As a credit card holder, 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.
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.
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.
*The details are indicative and subject to change from time to time as per RBI regulations and internal.
From above information 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.