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 Personal Loan or Credit Card, the better option?
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Personal Loan or Credit Card, the better option?

When we are in need of money; we tend to look out for the sources that would process our loans in the quickest possible time frame. However, it isn’t only about the quickest processing, there are a number of other factors usually considered while borrowing money. These include, rate of interest while repaying, the duration of repayment and the maximum amount borrowable and so on. Perhaps the two quickest forms of availing immediate funds would be either through a credit card or a personal loan, let us have a look at the various advantages & disadvantages associated with both.



Personal Loans

         Credit Cards

Maximum Borrowable amount

1 lakh – 25 lakhs

based on credit limit

Eligibility criteria

depends on income & previous credit history

depends on credit limit

Maximum repayment time

1 year – 5 years

Customer’s choice

Interest free period


till the date of the next billing cycle

Approximate range of rate of interest

13% p.a onwards

36% p.a onwards

Processing time

about a week

less than a day

Prepayment charges

1% – 5% (approx), may be waived at times


Let us understand this further through an illustration. Let us assume we borrow 2 lakhs as a personal loan and also as a credit card.

Personal Loan

Loan amount: 2 lakhs

Tenure: 3 years

Rate of Interest: 15% per annum

EMI: 6933

Total amount you will end up paying: 2,49,590

Credit Card

Loan amount: 2 lakhs

Rate of Interest: 36% per annum

If you repay within the billing cycle, you will need to repay only the amount you borrowed,

i.e. 2 lakhs

Calculate your EMI: if you pay Rs.10,000

The tenure is decided depending on how much you choose to pay and till the point of time you complete your payments.

So, assuming you pay Rs.10,000 every month, you will end up paying a total of: Rs.309989

As you can see for yourself, there are clear advantages and disadvantages with each of the methods which is why you need to carefully choose which would you choose.


Personal Loan or Credit Card, the better option? 5.00/5 (100.00%) 3 votes


Priya Rai is a loan consultant.