Personal Loan Vs. Credit Cards – Which one to choose

In today’s age, there are a variety of products that can bridge the financial gaps between you and your goals. However, personal loans and credit cards continue to be one of the most popular and commonly availed options. But which one should you choose, and why?

Personal Loan Vs. Credit Cards

Here are a few points of differences between personal loan vs credit card that can help you make the right choice:

  • Type of Credit – In the case of personal loans, the borrower receives a substantial amount of money as lump s As long as the borrower meets the personal loan eligibility criteria set out by the lender and gets his application approved, he can use this lump sum for a variety of purposes.In the case of credit cards, there is an ongoing revolving credit balance that is used up or maintained by the cardholder. The amount of money is not directly granted to the cardholder but rather to the merchant whenever the cardholder makes a purchase.
  • Interest Rates – Since the debate of personal loan vs credit card is about two different forms of credit, interest rates become an important point of consideration. The higher the interest rates, the more you end up paying for your credit. Overall, personal loan interest rates tend to be lower than or on a competitive level of the interest rates charged by credit cards. You can also use an online personal loan EMI calculator to determine the amount of EMI you will pay on your personal loans beforehand. 
  • Tenure – Another consideration when availing credit of any kind is the duration for which you intend to be paying it off. In the case of personal loans, a lump sum amount is borrowed which can then be paid off over a tenure that can typically span from one to five years. The exact tenure also depends on the personal loan interest rates offered by the lender. In the case of credit cards, the credit is availed for a short period of time and needs to be paid off within a much shorter tenure.

Keeping in mind all of these points, we can determine that the choice between personal loan vs credit card largely depends on the purpose of the credit. Credit cards are ideal for smaller purchases that can be paid off quickly. However, for larger purchases that require meeting various short term or long term goals, personal loans are the ideal choice.

In the event that you want to figure out your ideal personal loan EMI amount before applying for one, make sure to use a personal loan EMI calculator. It is an easy-to-use, simple digital tool that can easily generate your ideal EMI amount in just a few clicks.


Natraj Studied bachelor's degree in finance and business from Telangana University, Nizamabad. A Writer based In India, He has a degree in Charted Accounts and has very knowledgeable in credit repair and Banking Sectors. So, I decided to start a blog and share my knowledge to the visitors.

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