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Personal Loan Vs Credit Card EMI: If you are thinking of paying any expense in installments, then both personal loan and credit card EMI options come forward. But it is important to understand the answer to which one will really be lighter on your pocket.
Personal Loan vs Credit Card EMI: You have a plan to buy a new phone, settle wedding expenses or get your house repaired but there is no money in your wallet. In such a situation, the first question that comes to mind is whether to take a personal loan or go for credit card EMI? Both look easy, but the real difference lies in the hit they take on the pocket. Let us know which option is really beneficial and when which is right for you.
Why is a personal loan cheaper?
Generally, the interest rate on personal loan is lower than credit card EMI. The annual interest rate on personal loans is usually low, such as 10-15 percent, while on credit card EMIs it can go up to 18-40 percent. Personal loans have fixed rates, fixed tenure and uniform EMI, making it easy to calculate the total interest. Personal loan generally proves to be better for long term repayment i.e. 2 to 5 years.
When is credit card EMI right?
If the expense is small and you can repay the entire amount in a few months, a card with a promotional low-cost EMI offer is fine. But keep in mind that processing fees, GST and charges for missing due dates can make it expensive.
What to check before selecting
Compare not just the interest rate, but the processing fees, insurance, prepayment charges and total cost. Card EMI also restricts your credit limit, which can affect your score.
Overall, a personal loan is cheaper and safer for larger loans or longer tenures. At the same time, credit card EMI can be used to settle small expenses quickly. The only condition is that you pay on time.
