Personal Loan vs Credit Cards. Which is right for you?

When you think about loans, making the right choice is necessary. Both personal loans and credit cards are unsecured. So in case if you are considering taking a loan option and wondering about the option between taking a loan on your credit card or a personal loan, then this blog should be useful

What is a Personal Loan?

A personal Loan is a convenient way to handle your finances and gives you the flexibility to borrow money promptly. There are alternative loan options, personal loan offers fixed repayments in a short period.

When to Choose a Personal Loan?

In a situation where time is limited for financial planning for significant life events, opting for a personal loan can be advantageous due to its lower interest rates and adaptable repayment options.

Pros of Personal Loans:


Personal loans typically have a simpler and more relaxed approval process compared to traditional business loans.No collateral is required, and credit history or score requirements may be more flexible.

Easy to adapt:

Personal loans offer greater versatility in terms of how the funds can be utilized.They can be used to cover a wide range of business expenses, unlike some business loans with specific use cases.

Time Period:

Small business owners often require access to funds promptly.Instant personal loans can facilitate rapid access to capital, addressing urgent financial needs.A quick funds can be beneficial for time-sensitive business requirements.

Cons of Personal Loans:

Higher Upfront Costs:

Most lenders charge a processing fee for personal loans, which is typically higher compared to secured loans.This processing fee is usually a percentage of the loan amount, effectively reducing the amount the borrower receives.For small business owners, these higher upfront costs can strain already limited resources.

Expensive Interest:

Personal loans generally come with higher interest rates compared to other loan types.Interest rates can range from 12% to 20% per annum, which is significantly higher than secured loan options.

Pros of Credit Card:

Credit cards offer a wide range of benefits that can simplify financial transactions, enhance purchasing power, and provide valuable perks and protections.


Credit offers instant cash which attracts many individuals, making them a popular choice. Credit cards make funds easily available and remove the necessity of carrying physical currency

Approval time:

When there is a need for immediate requirement for cash credit card is the best option to provide you with the required money as soon as possible

Offers and Gift Rewards:

: In a Credit Card, each rupee you spend may qualify for rewards from the card issuer. The rewards can include offers in booking tickets, cashback, or points which can redeemed for various purposes like travel

Cons of Credit Card:

High interest:

If the Bill due amount is unpaid the interest aggregates amount becomes high. Credit card interest rates can be as high as 3% per month, which aggregate to 36% per annum

Impact on Credit Score:

When you failure to make credit card payments on time or maintaining balances close to or exceeding your credit limit can negatively affect your credit score.


Personal loans can use as a valuable financial resource unavoidable expenses that require immediate access to funds. Examples of such scenarios like medical emergencies involving hospital expenses or urgent cash requirements within a business operation. In these instances, the ability to quickly secure a personal loan can provide the necessary liquidity to address critical financial needs without delay.


Which is best Credit card or Personal Loan?

How much credit score needed for a personal loan?

Is a personal loan a better option compared to a credit card?

Karthikraja Jothinathan


The ZapMoney app makes personal finance easy, accessible, and affordable. The App is available on Google Play Store and App Store for download, allowing you to sign up and access easy personal loans. ZapMoney is powered by Monexo Fintech Private Limited which is a registered NBFC-P2P.
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