Emergencies can come to anyone at any time. In such a situation, most people spend money on credit cards and manage their work. But many times you fulfill your need with the credit card but are unable to return that amount in the grace period and get trapped in the debt trap. In such a situation, before using a credit card, you should also consider a personal loan once. Both personal loans and credit cards come under the category of unsecured loans and are means of easily providing loans, but the advantages, disadvantages, and utility of both are completely different. Know about it here-

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

In the case of taking a loan from a credit card, you don't need to be a customer of that bank, whereas if you want to take a personal loan, then it is very important to have an account in that bank. Only then can you apply for a personal loan.

You can take loans again and again from a credit card

A big difference between a credit card and a personal loan is that after paying the loan amount on a credit card, you become eligible to take a new loan again from the same credit card i.e. you can use a credit card to take a loan again and again. However, this is not the case with personal loans. 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 easily get the loan again 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 loans again and again also has a bad effect on your CIBIL score.

A grace period is not available in personal loans.

The use of credit cards has increased rapidly in 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. But if you do not return the amount in the grace period, then you have to pay a huge interest on the credit card. Due to this, many times you can get entangled in the debt trap. On the other hand, you do not get the option of a grace period with a personal loan. A personal loan is available with a fixed tenure, you have to repay the loan in that period. After taking the loan, EMI has to be paid from the next month itself.

Not many formalities for credit card

To take a personal loan, you have to give some important documents to the bank. The parameters of your salary etc. are checked. Only after this, your loan is approved. Whereas credit cards do not require much formalities.

Reward points and discounts are not available on personal loans.

On using a credit card, you get the benefits of reward points, gift cards, vouchers, discounts, and cashback. But you do not get such offers in personal loans. Therefore, you can get a better deal by using a credit card for shopping, etc.

Rules for closing personal loans 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 any charges like processing fees, prepayment charges, and GST. However, a personal loan cannot be closed by paying a lump sum amount before a certain period. If you do this, then many banks charge a penalty for this.

Credit card or personal loan, which is the better option?

Which option is better, a credit card or personal loan? In this case, most experts believe that taking a loan from a credit card is right when you need a small amount of 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 a personal loan instead of a credit card. In this, you get more time to repay the loan. This also makes the EMI smaller and you can easily repay it.

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