Credit Card Vs Personal Loan

It is hard to determine which one is preferable as both help in meeting your financial needs, depending on the requirements and situations. Let us analyse their features and draw a comparison between the two.

Credit Card Features:

Credit Limit: Credit card offers a revolving line of credit to the borrower which can be used for the payment of various expenses. The card comes with a set limit as chosen by the cardholder, depending on his/her monthly usage. If you spend beyond your credit limit, you will end up paying the additional fee on the card.

Type of Cards: Different types of are available for various purposes. Choosing the right card that suits your needs is an important thing you must remember before applying for a credit card. For example, if you are a travel enthusiast, credit cards offering traveling privileges and compliments can be chosen.

Perks and Benefits: Credit cards provide bonus and reward points, miles, discounts, privileges, compliments, and cash back offers on each spending. You can accumulate those reward points and redeem them later.
Payment Details: The cardholder needs to routinely pay the monthly charges based on the usage. Besides, the borrower will be charged annual fee and the additional fee on add-on cards and other facilities. If the user defaults on the payment, a certain period is extended as grace period by the lender.

Personal Loan Features:

•    Personal loan is an unsecured multi-purpose loan which you can use it to support your child's education, travel plan, house renovation, family wedding or any medical treatment.
•    You need not to put up your assets as collateral to avail a personal loan.
•    The interest rate can go up to 30% depending on your credit situation.
•    The tenure of repayment can range between 1 to 5 years.

Credit Card Vs Personal Loan

Credit Card

Personal Loan

Revolving line of credit

Lump sum upon approval

Instant approval and fewer documents required for processing

It takes quite a lot of documents for processing and the loan is approved only after the documents are verified.

Interest rate could range between differing based on the offerings by the lenders, a monthly interest rate is charged

Generally, fixed interest rate which could go up to 30% depending on your credit situation.

Annual fees and additional charges are applicable.

EMI based repayment

Eligibility is based on your income and credit history.

Lenders check your credit report before sanctioning the loan.

Recommended for small purchases and monthly expenses.

Recommended for short-term financial requirements and larger purchases.


A credit card or a personal loan is purely your choice based on the requirement and time frame. Choose the right one which suits your need and repaying ability.