Personal loan or credit card: When should you opt for it?
You do not need to be concerned if you intend to purchase high-priced items and are concerned about depleting your money. You can now borrow money from your bank to help you with this. A Personal Loan, which can be secured or unsecured and is primarily used for long-term finance, is an option. A credit card is a tool supplied by the bank to ensure that your daily buying experience is hassle-free.
You can easily borrow the appropriate cash and repay them over a certain period of time, either in regular installments known as EMIs or monthly bills, using either a Personal Loan or a Credit Card.
Which is Better: A Personal loan or a Credit Card?
Every circumstance in which we find ourselves is unique. While a Personal Loan may be appropriate in one case, a Credit Card may be more appropriate and cheap in a second or third situation, or neither may be appropriate for someone.
Before deciding on the best one, there are two important questions to consider:
What are you hoping to do with the funds?
A Personal Loan may be the ideal option if you need money for a specific purchase. A Credit Card, on the other hand, maybe better ideal if you require continuous access to credit.
How do you keep track of your payments?
Both personal loans and credit cards have expiration dates. A Credit Card is a sort of credit that lasts indefinitely, whereas a Personal Loan has a set start and end date. You should choose one that is appropriate for you based on your financial discipline.
| Particulars | Personal Loan | Credit Card |
| Purpose | A loan can be used for various things, including medical bills, children’s education, weddings, and house renovations. | Small and large purchases for business or personal needs. |
| Borrowing | By applying to a bank or financial institution with the required documentation | By using a Credit Card in-store or online. |
| Tenure | Usually from one year to five years. | Interest-free credit period, generally up to 45 days |
| Repayment | As EMIs to the bank or financial institution for a specified tenure | Paid by the customer at the expiration of the credit period |
When Should you use a Credit Card to Make a Purchase?
- When you want to buy something but don’t want to go over your credit limit
- When you have enough credit on your credit card to make a larger purchase.
- When you want to buy something in person or online.
- When you are unable to obtain a Personal Loan.
When Should you take out a Personal Loan to Buy Something?
- When you require a large sum of money that exceeds your credit card limit.
- When you’re contemplating a major purchase that you’d like to spread out over a period of time,
- When you need to make a payment to a company or individual who does not take credit cards.
Remember that you can always use your Credit Card for expenses that aren’t covered by your Personal Loan. So go ahead and apply for a personal loan or a credit card, as well as calculate personal loan EMI right now! Finserv MARKETS has a solution for you, whether you need a Personal Loan or a Credit Card.
