Credit Card Vs Personal Loan: Which One Should I Get

Credit card

A credit card is commonly used paying for the transaction. ‘Buy now and pay later’ concept of the credit card make it more attractive. The issuer of the credit card make payments on your behalf, later you have to repay that amount. It is also known as plastic money. It is very useful when you don’t have enough cash in hand, you can pay for the transaction by just swiping your credit card. The credit card also allows you to pay minimum balance and can pay the outstanding balance in the next month. One can get a credit card by simply applying in banks or through any online aggregators.

Advantages of credit card

1. Reduces cash requirement

One of the most important benefits of having a credit card is you don’t need to carry cash. You can pay for the transaction by credit card. You can use it in various places like petrol pump, grocery stores, shopping malls, flight booking etc.

2. Improves credit score

It helps in improving and creating a credit history. If an individual repays his dues at regular interval of time, the card companies send reports of payment activity to credit bureaus which build and improve credit score.

3. Cash withdrawal facility

Most of the bank provides cash withdrawal facility on credit card. Though they charge some interest on that withdrawal amount, it gives freedom to withdrew the amount like debit cards.

4. Tracks purchase

Shopping through credit cards helps to track your purchase. You can ask for a monthly statement of your credit card. You can easily get to know about your past purchase and can plan for future purchase accordingly.

5. Reward points or cash back

The more you shop through credit card, the more you get cash back or reward points. It is very useful when an individual goes shopping, movies, travel etc. He will get some reward points in every transaction, it is the primary advantage of using a credit card. You can redeem that reward points at the time of purchasing something. You will either get cash back or discount on purchase.

Personal loan

A personal loan is an unsecured loan provided without any collateral. It is used for various purposes such as a wedding, traveling, education purposes etc. It can be availed by both salaried as well as self-employed professionals. Many Banks and Non-Banking Financial Companies (NBFCs) offers a personal loan with an attractive rate of interest. Even instant personal loan facility is also available in the market, your loan will be approved just by filling an application form and by submitting necessary documents. Nowadays, it is very easy to get a personal loan if you meet with all the eligibility criteria. You have to repay the loan amount in equal monthly installments.

Advantages of taking a personal loan

1. Minimum documentation

One of the important benefits of taking a personal loan is minimum documentation is required. The loan amount is approved only on basic KYC, quick background checks, CIBIL score, and income proofs.

2. Instant available

Many banks provide a facility to get instant loan approval for its existing customers. The loan is approved by just filling application and submitting necessary documents. Most of the banks provide loan within 72 hours if the customer meets with all eligibility criteria.

3. Easy repayment

In a personal loan, the repayment system is very easy. You can repay your loan amount in equal monthly installments. You can increase or decrease the EMI amount based on your repayment capacity.

4. Collateral free

There is no need to mortgage property if you are taking a personal loan because it is totally an unsecured or collateral free loan. It is quickly available with less documentation.

Though both credit card, as well as personal loan, have their own benefits, a credit card is more beneficial for you because you can use it anytime and anywhere. It is portable which is not possible in case of a personal loan. You don’t have to pay any interest if you repay the amount before the due date and in the personal loan, you have to pay monthly EMIs. So, the credit card has more benefits compared to personal loan.