A personal loan is a type of unsecured loan, which is also called a signature loan and it is given based on the creditworthiness of the applicant, which can be used by the applicant for his financial needs.
A credit card on the other hand is when a borrower borrows a sum of money through an online transaction that he is liable to pay back within a few days
Mostly a personal is more affordable way to finance a large purchase than a credit card but in some cases credit card is also preferred.
Difference between a credit card and personal loan
A credit card helps you to borrow money up to a credit limit at any time while a personal loan is a fixed loan which you repay in EMIs for a predetermined tenure.
A credit card is also known as revolving debt because it has a credit limit that you can use as you like and it’s up to you to pay off the balance at the end of the month, else you will pay interest on a debt.
A personal loan is a fixed debt, you receive a fixed amount of money and you can repay it in EMIs.
It is necessary to repay the bills before time otherwise the interest rates can increase very rapidly.
A personal loan is an unsecured loan that is why interest rates on personal loans are higher than secured loans but it also gives the flexibility to use the loan the way you want to use it.
Credit card better than a personal loan
Credit cards are best for when you are a smaller purchase or you can consolidate your smaller debts which you can repay within a year.
The credit card offers a 0 percent interest APR on repayment of smaller purchases within a year. Having good credit helps you to get 0 percent credit card gives you an interest-free loan if you can repay the debt in full before the introductory period expires
Personal loan better than a credit card
A personal loan is better than a credit card when you have to borrow money for more than a year. Because it charges you lesser interest than credit cards if you borrow money for more than a year. Some banks also charge an origination fee of 1 to 5 percent, so you must check this before availing a loan, this is a one time fee that you can pay in cash or it can be deducted from the loan amount. Also, some banks do not mention it and that can make their APR lesser in comparison to other banks. That’s why you should always keep a check on this.
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