Borrowing Comparison
Loan vs Credit Card
Which borrowing option is right for you?
Head-to-Head Comparison
| Aspect | Personal Loan | Credit Card |
|---|---|---|
| Amount | ₹5,000 - ₹50 lakhs | ₹10,000 - ₹10 lakhs |
| Interest Rate | 8-14% p.a. | 24-36% p.a. |
| Approval Time | 3-7 days | 1-5 days |
| Processing Fee | 0.5-2% of amount | ₹0-₹5,000 |
| Annual Fee | No | ₹500-₹5,000 |
| Tenure | 12-60 months | Monthly billing |
| Withdrawal | Lump sum | As needed |
| Rewards | No | Cashback, Points, Miles |
| Impact on Score | Medium impact | Higher impact if misused |
| Flexibility | Fixed EMI | Full/Minimum payment |
When to Choose Personal Loan
- Need large sum of money (₹1 lakh +)
- Fixed tenure repayment planned
- Lower interest rates are priority
- Consolidating multiple debts
- Planning major expenses (wedding, home improvement)
- Need EMI stability for budgeting
When to Choose Credit Card
- Small frequent purchases (₹50,000 and below)
- Earn rewards and cashback
- Build credit history quickly
- Emergency short-term needs
- Regular monthly shopping and bills
- Take advantage of 0% EMI offers
Cost Comparison Example
Borrowing ₹2 lakhs for 1 year:
Personal Loan @ 10%
Principal: ₹2,00,000
Interest: ₹20,000
Processing Fee: ₹4,000
Total Cost: ₹24,000
Monthly EMI: ₹18,667
Credit Card @ 30%
Principal: ₹2,00,000
Interest: ₹60,000
Annual Fee: ₹1,000
Total Cost: ₹61,000
Monthly Minimum: ₹6,000