Credit Card or Personal Loan – Which One Is Right For Me?

By | November 6, 2020

The most popular option during any financial emergency would be either a Credit Card or a Personal Loan. Depending on the nature of your emergency, you can choose either. We’ll help you pick.

Choices can be in the form of taking money from friends and relatives, money lenders or your Mediclaim policy. But these options may not be beneficial at all times. So, you turn to Credit Cards or Personal Loans. Today, we’ll discuss the main features, benefits as well as the fine print of both these lending options.

Additional Reading: Incorporating Your Credit Card Into Your Budget

Let’s start with a Credit Card, shall we?

A Credit Card is a cashless instrument that allows you to make payments for utility bills, online and offline shopping, travel tickets and plenty more. Typically, you will find signature, platinum and silver Credit Cards across most banks in India. Let’s dive right into the benefits:


  • In case of unforeseen circumstances such as medical emergencies or loss of a job, Credit Cards can come to your rescue
  • You can use it in India or overseas
  • You can purchase products and make payments in Equated Monthly Instalments (EMIs)
  • Also, you can take advantage of discounts while shopping in offline stores as well as online
  • You can gain reward points on the purchases made through a Credit Card. Accumulation of these points can help you get free airline tickets and others.
  • Cashback is also available on certain cards
  • Paying the dues on time can boost your Credit Score
  • Only a nominal fee is charged in the form of a processing fee
  • You have the upper hand if you receive defective merchandise or face billing discrepancies

Additional Reading: Is It Time To Get A New Credit Card?

Okay, then. Let’s talk about the fine print as well, shall we?

What You Need To Be Careful About

  • Credit Cards can land you in big trouble if not used properly
  • Quite often, people commit the mistake of spending more than they actually have and ending up hurting their Credit Score
  • You lose more money in the form of late fees if you default on Credit Card payments
  • Also, there have been growing instances of Credit Card frauds across India, and you may have to pay a heavy price even if you get slightly complacent in its use

We’ve summed up Credit Cards for you. Let’s talk about Personal Loans now.

A Personal Loan, as the name suggests, is credit extended by banks and other financial institutions for personal use, marriage, educational expenses and medical emergencies. Let’s go through the advantages of a Personal Loan.

Additional Reading: Is Prepaying Your Personal Loan A Good Idea?


  • A Personal Loan is a multi-purpose borrowing option to cover medical expenses, travel costs, buying jewellery or other accessories, etc.
  • What keeps the game in favour of a Personal Loan is its faster accessibility, making it ideal for people looking to get emergency funds
  • A Personal Loan does not require much documentation as opposed to a Car Loan or Home Loan
  • There is no requirement of any collateral or security to procure a Personal Loan

You may access a Personal Loan very quickly, but there are certain disadvantages that one must be wary of before availing this option. Keep an eye out for the following:

  • If you don’t get a good deal, the interest rate can be quite high on a Personal Loan
  • Part payments can be costly as you may have to pay 2-4% of the loan amount as prepayment charges
  • If you do not have a good Credit Score, lenders will hesitate to extend a Personal Loan as it’s quite risky
  • At times, you can get a Personal Loan from banks even if you have a bad Credit Score. But you will be required to pay a higher interest rate, unlike the ones with a good credit history.

Additional Reading: Smart Ways To Use A Personal Loan

That should make it much easier to make a decision, right? Making an informed decision is always the way to go. It’s not really about which one is a better option; you need to look at what works for you. Personal Loans are a better option if you need a sizeable amount of money in a short time. Credit Cards work better for frequent, small-sized spending. We’re good, then?

Credit Cards or Personal Loans, there are a ton of offers for you. The best part – you may be pre-approved!

All information including news articles and blogs published on this website are strictly for general information purpose only. BankBazaar does not provide any warranty about the authenticity and accuracy of such information. BankBazaar will not be held responsible for any loss and/or damage that arises or is incurred by use of such information. Rates and offers as may be applicable at the time of applying for a product may vary from that mentioned above. Please visit for the latest rates/offers.

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