Credit Card vs Personal Loan � Which is Better?

Both credit cards and personal loans offer financial flexibility, but they serve different purposes and have unique cost structures. Borrowers must evaluate the nature of the requirement, repayment comfort, and pricing before choosing the right option.

When to Use a Credit Card

• Short-Term Purchases: Best for expenses that can be repaid within the billing cycle.
• Reward Optimization: Ideal for maximizing cashback, miles, or points.
• Emergency Spending: Useful for immediate purchases without paperwork.

When to Use a Personal Loan

• Large Expenses: Medical procedures, weddings, or home renovations.
• Longer Repayment: Lower EMI burden over 1�5 years.
• Lower Interest: Typically cheaper than credit card revolving balances.

Cost Comparison

Credit card interest rates range between 30�42% annually, whereas personal loans usually charge 10�20%. For long-term needs, personal loans are significantly more cost-effective.

Which Should You Choose?

Choose a credit card for short-duration needs and repay in full to avoid interest. Choose a personal loan for structured long-term borrowing where affordability is key.

A balanced approach helps maintain financial health while optimizing borrowing costs.