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Taking a loan involves plenty of permutation and combination; comparing which loan is better to take. Let us tell you here about the benefits of credit card loan comparing it with personal loan structure. 

By Subas Tiwari

Credit card users are aware of credit card loans. And there are people who keep a credit card because if they need a loan, they can avail the same from it. If you are also keeping in mind the convenience of getting a loan through your credit card, then you must know whether taking a loan in this way is beneficial or not. Let us see whether a personal loan or credit card loan is more helpful. 

Personal loan gives better interest

If you are looking to take a loan for a long time, then a credit card loan can cost you dearly. On credit cards, you usually get loans at a rate of not more than 12 per cent. Sometimes, under special offers, you can also get a loan at the rate of 11 per cent, but you cannot get a loan at a rate less than that. On the other hand, if you take a personal loan, you will also get a loan at an interest rate of up to 10 per cent or 10.50 per cent, provided you have a good record with the bank. So, if you are taking a loan for a long time, then it is better to take a personal loan from the bank and in this you can also get the interest rate reduced by talking to the bank. If the bank is impressed by your words, then you can get a big loan at low interest.

Get quick loan with credit card

You can go for a credit card loan in a few minutes if your loan amount is not very large. A credit card loan is approved in two ways. One by blocking the credit limit and the other is outside the credit limit. On the other hand, if you are looking to take a personal loan, mostly you have to follow a complete process that can take up to 5-7 days. 

Get pre-approved loan on credit card

You have to show all the documents while taking a loan from most of the banks. The bank verifies you and your income with these documents. Whereas, in the case of credit card loans, banks often offer pre-approved loans based on your credit score and credit card usages. You can take the loan as much as the offer is for a loan of up to the approved amount. The best part of this is that you do not have to do any paperwork in this.

Credit card loan is better if you want to pre-close the loan

When it comes to pre-closing of the loan, taking a credit card loan proves to be very beneficial. Most of the banks do not offer the facility of online pre-closing if you need to pre-close a personal loan from a bank. For example, even in big private banks like ICICI and HDFC, you have to visit the branch and go through a long process. On the other hand, you can pre-close a loan taken by credit card online in a minute. However, some banks may also set certain limits for pre-closing such as 3 months, 6 months or one year. Whereas in some banks you can pre-close the loan whenever you want. Keep in mind that while pre-closing the loan, you also have to pay some fee, which is applicable on the remaining principal, but the good thing is that you do not have to pay the interest on it.

What’s better?

If we analyse, taking a credit card loan is a profitable bet. Although, the loan amount may not be huge from it, but you may enjoy a lot of related facilities on a credit card loan. The best part is that you don’t need to go anywhere to get the loan, need not show any documents and go through any process to get it closed. In every way, taking a credit card loan is a profitable deal. In terms of interest, however, personal loan scores high.

Usually, a loan available on a fixed rate of interest, a personal loan is sanctioned for a given tenure of between 12 and 60 months payable via equal monthly instalments or EMIs that include the principal as well as the interest component. Personal loan for salaried individuals is more easily approved than those for self-employed people.

A credit card loan, on the other hand, is generally referred to as revolving debt. This is because the borrowed amount is dependent on the funds spent on the card and the balance that is left at the end of your monthly billing cycle.

Difference between credit card & personal loan

Basis of Difference

Credit Card

Personal Loan


Only select credit cardholders are eligible

Non-customers of the bank may also apply

Procedure for Borrowing

By accepting a pre-approved offer extended by the bank or by applying for the same

By applying to a bank or financial institution with documentation


Credited directly to savings/current account (if with the same bank) or in the form of a cheque

Amount paid as a lump sum to the customer’s savings/current account or via cheque

Approval Time

Within 24 hours

3-5 business days


EMIs added to monthly credit card statement for the said tenure

As EMIs to the bank for a specified tenure


Usually from 1 to 5 years

Usually from 1 to 5 years

Borrowing Limit

Up to the pre-approved limit set by the provider

To be calculated by the bank on the basis of income proof

Interest Rates

Higher than personal loans; varied from bank to bank and may also vary from customer to customer

10.50% onwards; depends on the customer’s income and credit history


No additional documents required

Identity proof, address proof and income proof required


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