What To Choose- Personal Loan Or Loan Against Credit Card
When there is the urgency of funds or any purpose, a personal loan can assist every competent person in using it handily. A personal loan is now available online on websites of different Banks and NBFCs, and there are even instant personal loan apps that help in the quick dismissal of personal loans. These websites provide potential customers with all necessary information regarding personal loans and even the comparative rates of different personal loans. The fundamental criteria to be eligible for a personal loan are the applicant's age between 23 to 58 years, net salary or income of at least Rs 30000, minimum of two years of experience in a job or any profession, and residence proof where the applicant is residing for at least a year or more. According to the borrower’s convenience, both the personal loan and loan against credit card have their advantages and limitations; according to the borrower’s convenience, one can be chosen.
On the other hand, credit card loans are handy and can be used physically in Store or online. If a person increases his credit card purchases and cannot pay off the dues on time, it can cost him an extremely high-interest rate on the remaining unpaid amount. It can further get accumulated and push the borrower into a debt trap. The credit card companies do not compel the borrower to pay off the balance all at once. Paying the minimum amount due or 'MAD' mentioned on the credit card statement is enough. Moreover, the credit card can be used until the remaining balance on it gets exhausted.
Both Personal Loans and Credit Card have their benefits and drawbacks. Eligibility criteria for most personal loans are not that rigid in comparison to credit cards. The purpose of debt consolidation with the low rate of interest personal loans serves the best. Personal loans can be borrowed online or offline, and the amount of a personal loan can get disbursed within half an hour once document verification is done. There are several drawbacks of personal loans too. Interest rates of personal loans range from 13% to 36% and have additional processing fees, which is on the higher side when compared to credit cards. HDFC Bank personal loan interest rate and some other banks providing personal loans are comparatively lower. Thereby it helps the customers to get a pocket-friendly personal loan. The credit score of the borrower must be high to get a personal loan approved. Even the documentation process in the personal loan plays a pivotal role, but that does not happen in the case of a credit card.
Credit card applications can be done anytime, and no additional documentation is required for it. If a person has a good credit rating, it is enough to make him eligible for a credit card loan. Credit cards also furnish options to transfer balance at times at zero per cent interest. The repayment period also ranges anywhere between 12 to 21 months which is the best for debt consolidation. There is no requirement of physical presence in a bank for application and approval of a credit card related loan. Still, there are some drawbacks of the credit card which must be taken into account. The interest rates of credit cards can be higher depending on the credit cards' APR. Even some credit cards also attract annual fees, late fees and over the time limit fees. Moreover, the essential criteria for a credit card loan with low interest rates are a CIBIL credit score of 700 or more.
A personal loan is a better option for salaried individuals and self-employed people with a continuous cash flow. Whereas, credit card loan is considered to be a revolving debt. So the ultimate winner depends upon the requirements of the borrower and his financial stability. It is always recommended for people to get loans with low rates of interest. So, according to the borrower’s convenience, he can choose a cheap personal loan or a cheap credit card loan.
Must Read:- REPAYMENT OF PERSONAL LOAN
