Which is better for you – Credit Card or Personal Loan?

Which is better for you – Credit Card or Personal Loan?

Every day millions of Indians search for credit cards and personal loans online. Credit cards and personal loans help working professionals, businessmen, businesswomen and self-employed people to meet their short term cash requirement. Individuals need credit card and personal loan approval quickly as their cash requirement can be urgent. However, not many people know the basics of credit cards and personal loans, thus putting them at great risk. They can end up ruining their CIBIL score if they are not able to pay their EMI on time. Therefore, read this article carefully and stay updated about both credit cards and personal loans.

At FinanceBazaar.com, we offer both credit cards and personal loans from more than 25 Banks and NBFC. Our vast experience with credit cards and personal loans for consumers has given us immense experience. Below, we share our experience and facts about credit cards and personal loans and detail the comparison of both products:



Credit Card

Personal Loan


Credit card is best purpose when you don’t have to use the credit card until emergency. You should use credit card when you are confident that you can pay within 30 days.

Personal Loan is best taken when you need lump sum money in your bank account. The purpose of personal loan can be emergency, medical, marriage, job loss, etc.

Interest Rate

Credit card is free to use for the credit period, generally 30 days. If you miss payment by due date, then interest rate can be as high as 60% per year.

Some banks offer free interest period of 1 to 3 months (contact us for details). Generally, the interest rate ranges from 10.49% onwards to as high as 30%.


Credit cards have a limit, so if you accidentally overuse your credit card, you will have to pay an “over-limit” charge. This charge can be as high as Rs. 2000 plus GST.

In personal loan, there is no concept of over-limit since the loan is credited to your bank account.

ZERO Interest

For credit cards, if you pay the full EMI due on time, month after month, then there is basically Zero Interest charged.

In the case of personal loans, you have to pay the Interest part with the EMI. EMI consists of Principal and Interest.

Loan Option

Some banks like HDFC Bank offer “Insta Jumbo Loan” depending on credit card limit. Most banks don’t give loan on credit card.

When it comes to personal loans, the best part is that you get lump sum loan in your bank account. The challenge is to use the loan judiciously. 


Default in credit card due payment affects your CIBIL score.

Default in personal loan EMI impacts your CIBIL very badly.


Not all banks offer credit cards. Approx. around 30-40 banks issue credit cards.

Almost all banks and NBFC issue personal loan. More than 50 Banks give personal loan.


Conclusion – So, which is the better option?

According to our experience, you should have a credit card but don’t use it for shopping, etc. Use the credit card only when you need it urgently. Regarding Personal Loan, take a personal loan when you need lump sum money for an emergency medical situation or marriage or business purpose or other must-do expenses. Don’t unnecessarily take personal loan since the EMI starts from Day 1 of approval of personal loan. Overall, personal loan is a better option in case of emergency since the interest rate is cheaper (starting 10.49%) as compared to credit cards (40% plus). If you need the money and cannot repay within 1 month, then ALWAYS go for Personal Loan.

Both credit cards and personal loans can be applied online and offline at FinanceBazaar.com

One Reply to “Which is better for you – Credit Card or Personal Loan?”

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