While credit cards offer convenience for everyday purchases, their revolving credit nature often leads to unstructured repayments, making it easier for individuals to accumulate long-term debt.
We often face unexpected financial needs, such as medical emergencies or urgent home repairs. What does one do in such a situation if you are not in the pink of your health? Usually, one looks for options like taking a personal loan or using a credit card. While both are convenient, one needs to understand which one is better. Here, we are going to tell you which option one should opt for.
Choosing between an instant personal loan and a credit card should depend on the nature and size of the expense.
Credit cards are useful for small, routine purchases, but for significant one-time costs like medical emergencies, home renovations, or education fees, an instant personal loan is often a better option.
While credit cards offer convenience for everyday purchases, their revolving credit nature often leads to unstructured repayments, making it easier for individuals to accumulate long-term debt.
“The average balance per credit card in India rose to Rs 32,233 by June 2024 from Rs 28,919 in June 2023, highlighting an increase in indebtedness among cardholders. A personal loan provides the advantage of a one-time lump sum amount, which can be used for planned or emergency expenses without the worry of increasing monthly dues. Since personal loans are disbursed based on eligibility criteria like salary and credit history, borrowers have a clear repayment plan without the uncertainty of fluctuating bills. This makes them a suitable option for salaried professionals looking for financial stability while managing larger expenses,” said Kaushik Chatterjee, Founder & CEO lendingplate.
According to Vikkas Goyal, Founder, Rupee112, the Supreme Court of India has ruled that banks can legally charge high interest on credit card dues, emphasizing that cardholders must be cautious about repayment obligations.
“In contrast, personal loans provide borrowers with a transparent and structured repayment schedule. Instead of dealing with variable monthly bills and penalty fees, a personal loan has fixed EMIs, ensuring financial discipline. Many instant loan providers also offer flexible tenure options, allowing borrowers to choose repayment durations that suit their financial situation. This predictability in loan repayment can be beneficial in avoiding unexpected financial stress,” Goyal said.
“As of June 2024, credit card outstanding balances in India amounted to nearly Rs 2.7 lakh crore, up from a little over Rs 2 lakh crore in March 2023, indicating a significant increase in credit card usage and potential debt accumulation among consumers,” he added.
In contrast, instant personal loans offer structured repayment schedules, ensuring borrowers have a clear timeline for repayment.
