Which is better: A personal loan or a credit card loan?


Which is better: A personal loan or a credit card loan?

Financial institutions in India are trying to make unsecured loans more accessible to people. Nowadays, these loans are sanctioned within a day and can be used to meet instant financial demands.

A personal loan is a popular type of unsecured loan which can cater to significant financial requirements. These loans can also be taken against the unutilised limit of a credit card. Some lending companies provide this facility making it even easier for those seeking immediate cash.

While anyone can avail conventional personal loans, loans on credit cards can only be obtained by respective cardholders. Now, the confusion arises regarding which one offers more benefits – a personal loan or a loan on creditcards.


So, here is a comparison between these two loans for helping you choose the better.

Personal loans  

Personal loans provide the following benefits to borrowers:

  1. High financing amount

One of the significant benefits of personal loans is that they can provide financing up to Rs. 25 Lakh. 

A credit card, on the other hand, won’t provide such an amount as loans.

  1. Repayment tenors that can fit any requirement
Standard personal loans have a repayment tenor ranging from 12 to 60 months. 

Thus, borrowers get flexibility in repaying the credit.

  1. Speedy approval and disbursal process
Financial institutions can approve a personal loan within 5 minutes and disburse the same within 24 hours. 

Thus, individuals can avail these loans for emergencies like medical situations.

  1. Hassle-free documentation procedure
A crucial factor that contributes to the rapid approval and disbursal of personal loans is its minimal documentation procedure.

  1. Flexi Loan facility
Some financial institutions provide a Flexi Loan facility where customers can also choose to pay only the interest as EMIs and repay the principal at the end of the loan tenor. Thus, Flexi Loan facility reduces the EMIs by up to 45% as compared to traditional personal loans.

Now, take a look at the features of loans on credit cards.
Credit card loans   

Customers can convert their credit card’s unutilised limit into a personal loan and avail the following features:

  1. No interest needed
A unique feature of these loans is that customers don’t have to pay interest on them, unlike personal loans. 

Generally, financial institutions provide these loans free of interest up to a specific period, for example, 90 days.

  1. No documentation required
An applicant has to provide all relevant documents when applying for a personal loan even though the process is minimal. However, with loans on credit cards, a borrower does not have to submit any document. 

Thus, the loan approval and disbursal process are even faster than unsecured personal loans.

These are the two major features that come with these loans. However, borrowers can avail the following benefits when they apply for a credit card which a standard personal loan will not provide:

  1. Reward points
Reward points make credit cards one of the best forms of payment while shopping online or offline. 

Cardholders can redeem accumulated points for cashbacks, vouchers, and coupons to make future purchases affordable.

  1. Joining bonus
A cardholder can receive reward points as joining bonus when they get credit cards without making any transactions. 
For example, one can get up to 20,000 points as a joining bonus with the Bajaj Finserv RBL Bank SuperCard. 

This SuperCard combines the power of 4 cards in one and brings several industry-free features. 

A customer can not only get an interest-free loan but also interest-free cash withdrawal from ATMs for a period of up to 50 days.

  1. Extra features

Cardholders can get complimentary airport lounge access, fuel surcharge waiver, free movie tickets, and offers on dining.

The above are some of the features that individuals get when they apply for a credit card. Additionally, availing loans on credit cards can be much more beneficial than standard personal loans.

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