Is a Personal Loan better than Credit Card for making Purchases

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Life is full of uncertainties and you may not always have adequate savings to meet such emergencies. And in such cases where the savings are less but an expense is to be incurred, people can opt to take a loan on their credit card or take a Personal Loan.

Credit Cards come with a pre-determined monthly limit that may be used as per your needs. There is a pre-approved monthly limit and the credit card can be used for making purchases up to this specified limit.

You may either repay the entire credit card bill amount before the due date or make a partial payment as per your financial situation. However, on the unpaid amount, a very high interest rate is charged on the unpaid amount which many a times leads to a debt trap.

One of the alternatives to Loan on Credit Cards is Personal Loan. The features of a personal loan are mentioned below:-

Features of a Personal Loan

  1. Versatile

As the name suggests a Personal Loan is granted for Personal purposes and a person availing the same can use it for any purpose. He does not have to disclose the purpose for which he intends to use this loan and can use it for any purpose. Irrespective of whether this amount is used for spending on a vacation or renovating a house or buying a phone or for any other purpose – you can always avail a personal loan.

  1. Affordable

A Personal Loan is more affordable as the monthly interest on Personal Loan is lesser than that on Credit Cards

  1. Hassle-Free

The entire process from applying for a Personal Loan to disbursal is completed quickly. An instant personal loan is hassle-free with no requirement of a guarantor. You may avail of a loan ranging from Rs. 50,000 to Rs. 10, 00,000.

Credit Card vs Personal Loan – Which one is better

Personal Loan

Before availing a loan either on Credit Cards or Personal Loan – a person should carefully evaluate which option is better. If the amount to be availed is small or the duration for which the amount is required is short – then a Credit Card Loan may be availed as it is pre-approved

However, in cases where the loan amount is fairly big or the loan is being availed for a couple of months – a Personal Loan may turn out to be a better option.

Before opting for any of these options – a borrower should carefully analyse the pros and cons of each option and accordingly make a decision.

Karan is CA by Qualification with the rare distinction of being awarded All India Rank 22. He is also the founder of this website and loves to help people with their Tax Queries.