What is the Difference between Personal Loans and Credit Card Loans?
by Mashum Mollah Loans & Credit Published on: 27 August 2018 Last Updated on: 08 November 2024
The two ways in which you can easily avail unsecured advances are personal loans and credit cards. Most lending organizations offer both. However, the best credit card comes with various perks like joining bonuses, reward points, discounts, etc.
Let’s understand the differences between the best credit card loans and personal loans.
1. Documents :
When you apply for a credit card, you require minimal documents like address proof, identity proof and age proof.
However, when you fill out a personal loan application form, you require some more documents like income certificate and bank statements.
2. The loan amount and its usage :
In the case of a personal loan, the lending institution fixes the loan amount and transfers it to your account at once. You can use the money for various needs like financing your education abroad or for your sibling’s wedding. In other terms, there’s flexibility in usage of the money you get from a personal loan. But the amount comes with a one-time exhaustion limit which you cannot renew.
On the other hand, lending companies pre-set a limit for your credit card usage. However, once you repay the utilized amount, your credit limit gets restored again. It lets you purchase and pay with regular repayment. Some companies offering the best credit cards also let you repay in easy EMIs.
Repayments :
You can pay the bills generated for credit cards through net banking. However, in addition to this, you can also use post-dated cheques as a repayment option in case of personal loans.
However, the lending institution gives you the opportunity to foreclose with early repayments of the principal amount along with interest in both the cases. However, you’ve to pay a minimal processing charge for early settlement.
3. Reward points :
You enjoy various perks of purchasing items using the best credit card. You can avail of cards depending on your spending patterns. For example – If you’re a travel enthusiast, you can opt for a travel card that offers travel miles on purchasing air tickets.
Being a shopaholic can help you earn reward points on every transaction made with your credit card.
4. Cashback :
When you make payments swiping your credit card, the financial company often offers you cashback. These help you save money as the cashback amounts are deducted from your bill amount at the end of the month, allowing you to repay less.
However, you don’t get any reward points or cashback option when you use the personal loan amount to purchase any product or service.
Hence, you can see how meeting the credit card eligibility criteria is better for you than fulfilling the requirements to apply for personal loans.
Cards like the Bajaj Finserv RBL Bank SuperCard offer industry-first features where you can avail of a loan on the available credit limit in your card. You get instant access to money which you can use to meet emergency expenses like medical issues. If you repay the amount within 90 days, you will not be charged any interest. You also have the option to pay the loan amount in 3 easy EMIs.
Thus, go with the best credit card company to reap the maximum financial benefits from them!
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