Borrowing Comparison

Loan vs Credit Card

Which borrowing option is right for you?

Head-to-Head Comparison

Aspect	Personal Loan	Credit Card
Amount	₹5,000 - ₹50 lakhs	₹10,000 - ₹10 lakhs
Interest Rate	8-14% p.a.	24-36% p.a.
Approval Time	3-7 days	1-5 days
Processing Fee	0.5-2% of amount	₹0-₹5,000
Annual Fee	No	₹500-₹5,000
Tenure	12-60 months	Monthly billing
Withdrawal	Lump sum	As needed
Rewards	No	Cashback, Points, Miles
Impact on Score	Medium impact	Higher impact if misused
Flexibility	Fixed EMI	Full/Minimum payment

When to Choose Personal Loan

Need large sum of money (₹1 lakh +)
Fixed tenure repayment planned
Lower interest rates are priority
Consolidating multiple debts
Planning major expenses (wedding, home improvement)
Need EMI stability for budgeting

When to Choose Credit Card

Small frequent purchases (₹50,000 and below)
Earn rewards and cashback
Build credit history quickly
Emergency short-term needs
Regular monthly shopping and bills
Take advantage of 0% EMI offers

Cost Comparison Example

Borrowing ₹2 lakhs for 1 year:

Personal Loan @ 10%

Principal: ₹2,00,000

Interest: ₹20,000

Processing Fee: ₹4,000

Total Cost: ₹24,000

Monthly EMI: ₹18,667

Credit Card @ 30%

Principal: ₹2,00,000

Interest: ₹60,000

Annual Fee: ₹1,000

Total Cost: ₹61,000

Monthly Minimum: ₹6,000

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