Credit Cards vs Personal Loan: Which is better for short-term goals?

Have a big purchase to make and confused whether to purchase using your credit card or take a loan?

Both credit cards and personal loans are categorized as unsecured forms of loans.

Ideally personal loans are taken for covering up major lumpsum expenses and credit cards are used for short term expenses, expenses which can be paid monthly.

Let’s look at the features of both credit cards and personal loans:

-          Interest rate

Personal loans carry a lower interest rate as compared to credit cards. Get the best interest on personal loans with Emirate NBD click here to know more.

 

-          Term

The repayment term for personal loans is a minimum of 5 years in contrast to credit cards which is up to 55 days interest free.

 

-          Post repayment

Credit cards offer more credits post repayments, in contrast to personal loans. In addition to this credit cards are also packed with cashbacks and rewards unlike personal loans. Learn more about credit cards here.

 

-          Amount

Sometimes your credit limit may be lower than the amount you need, which is where personal loans are better, as the payment or the purchase can be completed with the lumpsum of funds.

 

-          Speed

Personal loans take longer to be approved by the granting party in contrast to credit cards which is normally under 24 hours. With respect to processing a personal demands documentation in comparison to credit cards which require zero documentation. You can improve the approval rate with your credit score learn more here

Now that we have a fair idea on the differences between personal loans and credit cards, there are still some variable factors which you may want to consider, type of lender, interest rate, market and economic factors, credit score, eligibility. These are some factors which may impact your ability to borrow even if you have planned your financials out.