You may require financial assistance for different instances. For some situations, the need may be urgent and for other events, you have some time in hand. You may require a hefty sum of money to go on your next trip or finance wedding or renovate home. For such occasions, you can choose from two options – credit card or personal loans. While both may seem attractive, there are a few key differences between the two. Read on to know more about them in detail.
Your Objective
Your reason for availing credit can help you in choosing the right option. A credit card provides a continuous but smaller line of credit. It can help you cover your monthly expenses like shopping, utility bills, and services. It can also come in handy for short-term financial needs such as buying an electronic item.
Getting a credit card is easy and one can easily apply for a credit card online. You can also download a credit card app for an easy and smooth application process.
Personal loans, on the other hand, are more useful when you need a bigger loan, or your needs are more pressing. For instance, you may want to renovate your home or pay medical bills. You can manage such demanding situations independently by drawing on personal loans. They are easy to avail and can be applied online. These days it is possible to avail them within a few hours. Bajaj Finserv is a trusted lender that offers instant approval and quick disbursal on personal loans. You can click on the official site to know more about them in detail.
Credit Limit
The borrowing limit in case of credit cards is defined by your monthly income and is usually predetermined. Once your online credit card is approved, you can use it across multiple transactions.
Personal loans, on the other hand, work differently. The loan amount depends on your monthly income, past credit history, and current loans. You get a lump sum once you qualify the criteria and agree on the rate of interest on the entire loan amount. You can also go for Bajaj Finserv Flexi Personal Loan that allows you to do multiple withdrawals from your sanctioned amount. This feature allows you to pay interest only on the amount you utilize.
Bajaj Finserv also offers pre-approved offers for personal loans, home loans, and business loans. You can fill your basic details and check out your pre-approved offer here. These loans are easy, quick and require minimal documentation.
Repayment
Credit cards provide you with interest-free loans for 45-51 days. You are billed every 25-31 days, depending on the credit card issuer. However, to avoid compounding interest on your dues, it is advisable to clear the entire amount. If you miss your last date, your credit amount can attract substantial interest rates. You can use a credit card app to keep track of your last dates and earn reward points on paying your bills.
Repaying your personal loans is rather straightforward in the form of EMIs. Another benefit of online personal loans is the use of online EMI calculators. This tool is highly beneficial in determining your financial obligations before availing the loan.
Personal loans can also be managed through loan apps. You can choose lending app, such as the Bajaj Finserv app, you find all the details right from pre-loan to post-loan services.
Interest Rate
The rate of interest is an important aspect to consider when you wish to avail a loan. Although credit cards allow you free credit for some time, the interest rate is rather steep. Moreover, the interest rates are flat and do not change.
Interest rates in the case of personal loans depend on a good credit score along with other factors. Moreover, some lenders offer reducing balance rates that decrease as you repay the principal amount.
Credit card and personal loan are both attractive options to aid you in a financial crisis. Your reason for availing the credit, urgency, and the amount can help you in determining the better option.