The whole concept of credit cards is to let you use money when you don’t have the resources. Want to buy a new TV, fridge, mobile phone? Swipe a credit card and you can get anything you want. Yet, when it comes to paying the credit card bills at the end of each month, that is when you meet reality and it is not such a pretty picture if you have overspent. A personal loan, on the other hand, does not let you overspend. A personal loan is ideal for larger purchases and a credit card is ideal for short-term purchases.
Here are some benefits of applying for a Personal Loan over taking a Credit Card.
- A personal loan has a comparatively lower rate on interest as compared to credit cards.
- You can repay the loan in monthly EMIs and not altogether at once
- You can avail a personal loan of a higher amount which exceeds your credit card limit.
- The process to avail a personal loan is now simpler and you can get an approval on the spot.
- If you have a good credit score, then you have a high chance to get a low-interest rate on personal loan.
- You can take a personal loan of upto Rs 15 Lakhs
- You get the flexibility to choose a tenure which suits your repayment capacity.
A credit card, on the other hand, gets difficult to handle when you have multiple outstanding bills to pay. Also even though you have a set credit limit, it is not ideal to use all of it. Usage of 30% and above is deemed as a bad usage of credit and implies that you have too many credits. This, in turn, affects your credit score which is like a report card for all your spending habits.
If you use a credit card for short term credit goals and pay the bills by the due date, then credit cards are a feasible option. If not, then you can opt for instant personal loans.
When Can You Use A Credit Card and A Personal Loan?
Uses of a Credit Card
- Short term credits
- Instore or online purchases
- If the purchase fits in the credit limit
- In case of an emergency
Uses of an Instant Personal Loan as Compared to Credit Cards
- When you need money which does not fit your credit limit
- Purchases you would want to pay for on a monthly basis over time
- When credit cards are not accepted
- When you want to improve your credit score
You can use a personal loan EMI calculator when you take a personal loan. This calculator will help you see how much you have to pay each month as compared to a credit card bill. The number will be low depending on how much is your loan amount.