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Credit Card EMIs or Personal Loan: Which is a better option?

5 MinsJune 27, 2019

Using a credit card and availing a personal loan, both have their distinct benefits. The argument –– which is better of the two –– depends on the intent or the purpose one wishes to use it for.

For shopping — whether online or offline—a credit card is worthwhile, as it can help you make most of the deals, offers, and discounts deals doing the rounds, enabling you to save as you spend (in the form of reward points and cash-back offers).

Personal Loan

Here are certain other benefits of using a credit card:

  • Helps in managing cash flow better — You aren’t restrained when you are short of money or wish to use it for other priorities.
  • Cash withdrawals — This facility is extremely useful when you need hard cash during an emergency.
  • Interest-free period — You can buy goods and services without any interest charges for a period of up to 50 days, also known as the credit period. The credit period will depend on the date the transaction is carried out.
  • EMI facility — This makes consuming high-value goods and services easy. You can easily convert your high-value purchases into Equated Monthly Instalments (EMIs) of 3 months, 6 months, 9 months, 12 months 18 months, and 24 months –depending on what suits you––subject to applicable rates.

Usually, the interest rate is in the range of 13%-18% p.a. (monthly reducing balance) depending on the EMI tenure you opt for.

Suppose, you wish to buy gifts for your family during festive times, but do not have sufficient money immediately, you can simply swipe your Credit Card and use the ‘convert transaction into EMI’ facility. Liquidity conditions will not get in the way of your celebrations. With a credit card in your pocket or wallet, you don’t need to carry wads of cash when you venture out shopping, dining or travelling. You can use even book your movie tickets using a credit card.

Axis Bank offers a variety of credit cards opt for the one that specifically suits your needs. Remember that choosing the right credit card is just the first step. How you use this plastic money will determine your financial well-being.

In addition to the above, at times life throws at us unpleasant surprises, and to face them we urgently need the money. To fulfil your immediate cash requirement during testing times, availing an ‘Instant Loan’ against your credit card could prove to be handy and a sensible alternative.

Axis Bank offers ‘Instant Loan’ against your credit card at an attractive rate of interest with multiple tenure options (12 months, 24 months, 36 months, & 48 months) to suit your budget, making repayments comfortable.

‘Instant Loan’ against your credit card is offered without any documentation, and the loan amount is directly disbursed to your Axis Bank’s Savings account.

Similarly, a Personal Loan proves to be your lifeline – a loan in need, for whatever the purpose be: medical emergency in the family, wedding expenses, festival expenses, renovating your home, fulfilling your dream vacation, and so on.

The Personal Loan is usually disbursed within 48 hours, sometimes even on the same day, if you meet the personal loan eligibility criteria and the documentation is complete. This being an unsecured loan, you don’t need to provide your existing assets (house, car, investments, etc.) as collateral. But before disbursing a personal loan, the bank would conduct its due diligence process to assess your financial stability and repayment ability.

Axis Bank offers a Personal Loan at a competitive interest rate, depending on your age, income, number of years of work experience (in the current job/ profession, and total), and your credit score, among many other facets. To repay comfortably, you can choose the repayment tenure ranging from 12-60 months with an EMI facility.

You also have the option to make part pre-payments towards your personal loan. Currently, Axis Bank levies no charge for part-prepayment of Personal Loan.

With a Personal Loan, you don’t need to disturb your existing finances assigned for vital goals (that is, child’s education needs and your retirement).

So, avail of a Personal Loan from Axis Bank when you need it the most!

To conclude…

Before you make a choice between a Credit Card EMIs and Personal Loan, assess the purpose (why you need the funds), the financial requirement, how do you plan to repay, and weigh the pros and cons.

For big ticket requirements that are beyond your credit card limit, such as medical emergency, wedding expenses, home renovation, etc., availing a Personal Loan will be a sensible choice, on account of the lower interest rate and flexible repayments with longer repayment tenure available on a Personal Loan.

On the other hand, for shopping, dining, booking movie tickets, travelling, etc., which may not necessarily be high-value spends, swiping a credit card can prove to be a better choice and you always have the option to convert the high-value purchases into Credit Card EMIs to repay within a short duration.

Disclaimer: This article has been authored by PersonalFN. Axis Bank doesn't influence any views of the author in any way. Axis Bank & PersonalFN shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.

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