Santa Claus comes around just once a year. In the meantime, there are Credit Cards.
What is your plan of action when you are in need of some cash or credit and you do not have sufficient funds? You may either opt to swipe your credit card or take out a loan. You have two options, either take a loan on your credit card or take a personal loan . To make a choice between the two, you will have to draw a comparison based on our needs and situation.
| Personal Loan | Credit Card |
|---|---|
| Personal loan is usually an unsecured loan taken for various purposes ranging from medical reasons, to expensive purchases to a vacation or even debt consolidation. The interest charged on personal loans is high as they are unsecured loans. | Loan on credit card is a pre-approved loan that does not require any documentation. It is the fastest source to attain unsecured credit. In this type of loan, a certain part of your credit card limit that is unutilized is offered as a loan. Loan on credit card is not same as cash withdrawal. |
A personal loan and loan on credit card seem similar but are not exactly the same.
| Documentation | A personal loan requires quite a number of documents for approval and takes a few days to come through, however loan on credit card does not need any documentation and is faster to attain. |
| Interest |
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| Unsecured Loan | However, both these loans are unsecured and there is no collateral involved. |
| Tenure | A personal loan requires quite a number of documents for approval and takes a few days to come through, however loan on credit card does not need any documentation and is faster to attain. |
| Loan Amount | Credit card loans can be taken for lower tenure periods, while personal loans are usually long duration loans. |
| Documentation | A credit card loan is a suitable option when in need of a small amount of loan, while with personal loans, you can avail yourself of a huge loan. |
After comparing both loans, you can make a choice based on your financial need, time frame for which you need the loan and how soon you need it. If you are clear about your requirements, it is easier for you to make the right choice.
When you take a loan against a credit card, this is an unsecured loan. It is very similar to same day cash loans. A credit card on the other hand is a payment card which is issued by banks to allow you to buy for things offline and online. You can use this card for cash withdrawals and balance transfer as well.
Taking a personal loan can actually improve your credit score when it comes to the long term if you make timely and consistent repayment if your debt. Late payments can damage your score when they are reported to the credit bureau.
This depends on your need. If you require cash, personal loan and or credit card would be the right choice. A credit card is better for a short-term debt, and a personal loan is perfect for those who require time for repayment.
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