When you suddenly need money, there are two options: a credit card or a personal loan. A credit card is beneficial for small amounts and short periods, while a personal loan is suitable for larger amounts.
If you suddenly need money, you have only two options. Credit card or personal loan. Sometimes even credit cards have a transaction limit of up to Rs 3 lakh. However, let’s understand in simple terms which option should be used in times of difficulty, which option will be financially beneficial.
Sometimes a credit card is used quickly, while at other times a personal loan is chosen. The interest rate on personal loans also varies from bank to bank. In such a situation, how do you decide where and when to use a credit card, and when to use a personal loan? If you have such a question or need arises, you can also use this trick.
You do not need to be a customer of the bank to use a credit card. If you are not a customer of the bank, you can take its credit card. However, to take a personal loan, you need to be a customer of the bank. Moreover, if the CIBIL score is not good, there are difficulties in getting a personal loan. If it is not paid on time, there is a risk of the CIBIL score getting damaged.
While taking a loan from a credit card, it is not necessary to be a customer of that bank. But if you are thinking of taking a personal loan, then it is mandatory to have an account with that bank. You can apply for a personal loan only after opening an account.
To repay a loan taken from a credit card, you can take a new loan again from the same credit card. That is, a credit card can be used for loans repeatedly. But once you have taken a personal loan, if you want to take a personal loan again, you have to apply for it anew. At that time, your credit score is checked.
If your credit score is good, you will get a loan easily. But if the score is low, it may be difficult to get a personal loan a second time. Credit cards offer many benefits, such as reward points, gift cards, vouchers, discounts, and cashback. But personal loans do not offer any such offers.
So, should you take a loan from a credit card or a personal loan?
Most experts believe that if you need a small amount for a short period of time, it is better to take a loan from a credit card. Because you can easily repay it during the grace period. But if you take a large amount from a credit card and cannot repay it during the grace period, you have to pay a large amount of interest on it. This increases the chances of getting stuck in a cycle of debt.
