For people trying to opt for short term loans in India there are many options available. However, there is always confusion among the borrowers regarding which one is better: personal loan or credit cards.
Although there are many advantages to each of the methods, one must make an informed decision. Regarding choice to choose the one among two, there are a couple of considerations we are going to discuss below.
What is a Credit Card?
A credit card is a plastic or metal card that helps you with making purchases and dealing with the reimbursements sometime later. This is a cycle where a person uses the credit, repays it back and then again uses the funds for later transactions.
However, when you are opting for such short term loans, credit cards might be an easy and handy option to use.
What is a Personal Loan?
The personal loan falls under the classification of unsecured loans that require direct repayment of the loan with an appropriate interest rate. One of the remarkable contrasts between Mastercards and individual credits is that the last option isn't spinning.
However, depending on your needs for the funds you can avail of either a personal loan or credit card.
Differences Between Credit Card and Personal loans
- Credit cards offer a limited but revolving limit, thus once you overspend the line of credit is stopped. However, on the other hand, personal loans help you get a one-time amount. Please note that personal loan limits are set as per your financial stability and salary slips.
- Annual Percentage Rate or APR for credit cards depends on the bank and the bank’s individual schemes. On the other hand, for personal loans interest rates start at the rates that are determined by the banks.
- Monthly payments for credit cards are just a variable based on the credit card amount that you have spent in a single billing cycle. For personal loans, you need to choose the tenure of the loan you choose for paying the EMIs.
- The credit card limit is based on income and several other factors as well. You can avail a personal loan of up to ?25 lakhs or more based on your income conditions.
Therefore, more or less both credit cards and personal loans help in instant cash loans for a person. However, the factors and the eligibility or their limits vary significantly from one to the other.
Credit Cards or Personal Loans: Which One is the Better?
A credit card is a brilliant way to tackle short term loans in India by gathering immediate purchasing power. This is due to their ability to help in cash flow for a short period of time. On the other hand, in the case of personal loan they are great at covering lump sum costs an individual needs to bear.
Moreover, personal loans are also a great choice as they have longer tenures than most credit card companies can offer. Ultimately, the choice to choose an appropriate service depends on the mentality of the user. Let us help you out further by provisioning specific circumstances where you need personal loan:
- Unexpected medical expenses are one of the key considerations to opt for a personal loan.
- Debt consolidation can be better achieved if you are using personal loans. This strategy helps in consolidating the previous debts and repaying the loans within the timeframe.
- Wedding expenses are also a good investment to apply for personal loans.
Therefore, it is needed to choose an appropriate financial scope which can be either personal loans or credit cards. Personal loans are providing more stability and they are also having flexible tenure as well.
When Should You Opt for a Credit Card?
Here are some popular uses if you are opting for a credit card, some of them are as follows:
- Individuals who are making purchases within their credit limit need to opt for credit cards.
- Financing a purchase with affordable EMIs can help relieve a person from their financial pressure as well.
- Cashback and rewards are also available with a credit card.
Conclusion
Short term loans in India are already available and they are available in a variety of methods which can be credit cards and personal loans. Ultimately, the effective strategy involves using a combination of personal and credit card facilities. You need to evaluate the advantages and disadvantages of each available option.
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