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Personal Loan

Credit Card Loan vs Personal Loan: The better choice to beat financial blues

Summary: Credit Card Loan vs Personal Loan. Compare interest rates, eligibility, EMI, Loan tenure. Choose the best whats right for you. Know more!

11 Nov 2021 by Team FinFIRST
Credit Card Loan vs Personal Loan

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As the world deals with the far reaching effects of the pandemic, pressures related to personal finance can be off the charts.

Has a bill fallen through the cracks of your already stretched wallet? Is there a major payout coming your way? Or a financial emergency that is giving you sleepless nights?

If so, you’re probably weighing the options of taking a personal loan or maxing out your credit card to secure some much needed cash. The right financial decision will depend on a number of factors – i.e. the amount of funds required, your credit score, willingness and ability to pay on time. For instance, if you need to make a big payment for a medical or education-related emergency, or have overspent on your wedding budget, your credit card may not be enough. Here are some of the differences between a personal loan and a credit card, and how you may use either facility to win the day.

What is right for you?


You’re suddenly in need of money for a major expense. Whatever the reason, you want extra cash. What you don’t want to do, is dip into your hard-earned savings. That money is best invested and put to work for you. Which leaves you with two choices: Your credit card or a personal loan.

credit card is great for many reasons. It’s handy when you make purchases. It’s also your safety net when you’re low on funds. However, the interest rate on a credit card borrowing is far higher than a personal loan. So when it comes to borrowing a substantial amount for a longer period of time, a personal loan can help you save money. Let’s dig a little deeper.

 

Credit card versus personal loan

 

  Credit Card Personal Loan
Loan amount Your credit card will have a set credit limit, which means if you’re looking for more money, you need to look elsewhere or use another card. A personal loan is perfect for working professionals. You can borrow from ₹ 1 lakh to ₹ 25 lakhs, based on your eligibility rating.
  Find out more about getting an easy and quick Personal Loan here.
Tenure You have to settle your credit card bill, or at least pay minimum amount, within 45 days or else you start generating interest. There might be insufficient time to pay back a large sum of money. So think ahead. With a personal loan, you can choose a duration up to 5 years. With the help of a personal loan calculator, you can slice down your loan into monthly payment plans with minimum fuss.
Interest
Credit cards operate on revolving credit. Pay a minimum amount, and you avoid paying the interest while the rest of the amount is added to the next month’s bill. If you don’t, you start generating interest rates, which pile up. If it’s a large sum of money, your interest could end up being much more than that of a personal loan.
 

Personal loan is a bit flexible. You can opt for a fixed rate or reducing balance rates.

  Check out this easy EMI loan calculator to find out which personal loan interest is best for you.
Easy application If you own a credit card, all you have to do is swipe and pay. If you don’t, you can fill out an application online or at the bank.
 
Personal loans are easy to apply. Find out your eligibility online with a few keyboard clicks. Then meet with the banking professional and arrive at a mutually amiable payment plan.
Extra loans If you max out your credit card limit, you can’t get any more money.

With a personal loan, you can request for additional funds through the top-up facility.

  It’s wise to explore both these quick lending options available to you before you absolutely choose one.

  

 

 

 

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

The features, benefits and offers mentioned in the article are applicable as on the day of publication of this blog and is subject to change without notice. The contents herein are also subject to other product specific terms and conditions and any third party terms and conditions, as applicable. Please refer our website www.idfcfirstbank.com for latest updates.