Credit Card Loans Or Personal Loans? Which One Is Better?

Are you in urgent need for some credit or cash? 

What do you do when you don’t have enough funds to meet your requirements? 

The best option would be to take a loan. You could either take a personal loan or a credit card loan or loan against gold. These are some of the most preferred loan options when people are in urgent need for some extra funds. Taking a gold loan wouldn’t be possible unless you have gold in the form of jewelry, coins or other items.

Some people often find it confusing when it comes to choosing between personal loans and credit card loans. However, it doesn’t have to be so. The main factor that decides the type of loan you choose is your personal requirement. Both loans have certain advantages and disadvantages. Carefully consider all these while keeping in mind your requirement and purpose along with your ability to repay.

Credit Card Loan   

The loan on credit card is the quickest way to get a credit that is unsecured. These are pre-approved loans and the loan amount given is the maximum limit of your credit card. This is different from cash withdrawals. The credit limit on your credit card will be temporarily blocked once the loan has been sanctioned.

Personal Loan

Personal loans are often taken when there is a need for a larger amount of money to meet some emergency requirements. These needs usually include a medical and health emergency, to pay for the expenses of a marriage or engagement, to make an expensive purchase or to clear off existing debts.  Personal loans are also unsecured loans. The interest charged on these loans is quite high.

Comparison Between Credit Card Loan And Personal Loan

Comparison CriteriaCredit Card LoanPersonal Loan
Who is eligible?A select group of credit card holders is eligible for this loanThis loan can be applied by anyone including the people who do not have a bank account with that specific bank
Secured/UnsecuredUnsecured loanUnsecured loan
The maximum amount for the loanThe amount is pre-approved which is usually the maximum limit specified by your credit cardAny amount that is required by the applicant to meet their needs
Documents required Additional documents are not required to obtain this loanDocuments including proof of identity, proof of residence and proof income are necessary to get this loan.
Time taken for approvalWithin a day (24 Hours)Somewhere between 3-7 business days
Rate of Interest10%- 20% (On an average)45-60 days of interest-free period for repayment.10.99% – 17.50% (On an average)
Tenure periodShort tenure period (Usually between 6-36 months)Longer tenure period ( Between 1-5 years)

Credit Card Vs Personal Loan – How to Take A Decision

  • Opt for a personal loan if you are looking for a bigger amount as loan
  • Both loans do not require a collateral as security
  • Credit card loans do not require any documentation and the amount gets disbursed within the same day. This would be the right choice if you need funds immediately
  • The interest rate charged for a credit card depends on the credit history of the borrower. A good credit history ensures that you get a loan at a much lower interest rate. 
  • The interest rate on personal loans could be anywhere between 10.99% – 18-20 % 
  • While personal loans give you a longer tenure period credit card loans gives you an interest-free period during the first 45-60 days

Compare both the loans keeping in mind your requirements: The amount needed, how long you need it for, and how quickly you need it. Choose one that works best for you.

This blog is maintained by the Finaura team. Finaura is a solution that will help you find the best gold loan solution from gold loan company nearest to you. If you have any queries please feel free to contact us. Call us on +91 484 2388285 or email us at [email protected]