Personal loan and credit card both are two different options of unsecured loan. The facilities and uses are also different. Both provide easy loan and are very helpful in emergency conditions, hence they are called companions in difficult times. But still there is a lot of difference between the two. If you are in a difficult situation, where you need money very badly, then which option should you choose when? Know the features of both here and understand every aspect.

You can take loan again and again from credit card

A big difference between credit card and personal loan is that after paying the loan amount in credit card, you become eligible to take a new loan again from the same credit card i.e. you can use credit card to take loan again and again. But this is not the case with personal loan. After taking a personal loan, if you want to take a personal loan again, then you will have to apply for it again. At that time your credit score will be seen once again and all the parameters will be tested. If your CIBIL score is good then you will get the loan again easily and its interest rate may also seem low. But if the credit score is not good, then it may be difficult to get a personal loan again. Apart from this, taking personal loan again and again also has a bad effect on your CIBIL score.

Grace period is not available in personal loan

The use of credit card has increased rapidly in the recent times because you get a grace period of some time to repay the loan. If the loan is repaid in this grace period, then the loan amount can be returned without interest. However, after the grace period is over, a lot of interest has to be paid. You do not get the option of grace period with personal loan. After taking a personal loan, you have to pay EMI along with interest from the next month itself.

It is not necessary to be a bank customer for credit card

In case of taking loan from credit card, it is not necessary for you to be a customer of that bank, whereas if you want to take a personal loan, then it is very important for you to have an account in that bank. Only then you can apply for personal loan. To take a personal loan, you have to give some important documents to the bank. The parameters of your salary etc. are examined. Only after this your loan is approved. Whereas credit card does not require much formalities.

Reward points and discounts are not available on personal loan

On using credit card, you get the benefits of reward points, gift cards, vouchers, discounts and cashback. But you do not get such offers in personal loan.

Rules for closing personal loan are also different

You can repay the credit card amount together in the grace period. Apart from this, if the credit card loan amount is high, then you also get the option to convert it into EMI. However, for this you have to pay many charges like processing fee, prepayment charge and GST. But personal loan cannot be closed by paying a lump sum amount before a certain period. If you do this, then many banks charge prepayment penalty for this.

When is it wise to choose which option

Which option is considered better among credit card and personal loan? In this case, most experts believe that taking a loan through a credit card is right when you need a small loan for a short period because you can easily repay it in the grace period. If you take a large amount through a credit card and are unable to repay it in the grace period, then you may have to pay a huge interest, due to which you can also get entangled in the debt trap.

So if you need a large amount and cannot arrange money from anywhere, then it is wise to choose the option of personal loan instead of credit card. In this, you get more time to repay the loan. This also makes the EMI smaller and you can easily repay it.