Credit Card Vs Loan – EverydayLoanIndia



Credit cards and loans are terms related to a financial backup when you do not have cash and have some requirement or manage the purchase amount in different EMI. You can use both things for your temporary arrangement of funds. But there are many differences in the usage of loans and credit cards. Each is beneficial for some reason and can create difficulties in violating its terms and conditions. There are some similarities and many differences in using a credit card.

Increase the credit score

If you use a credit card and pay its bill at an appropriate time without delay, your credit score will increase, and you can increase your credit limit. Regularly using credit cards for different purposes will improve your sound experience.
Similar benefits are there in using the loan. If you borrow a loan and repay it per tenure, your credit score will increase, and you will be eligible for borrowing a higher amount next time.
But in both cases, either credit card or loan, your credit score will fall if you do not follow the repayment conditions. You may face many difficulties like a rejection of a loan for next time, a penalty on late repayment, a decrease in CIBIL score, etc.

Rate of Interest

The interest rate for a loan is slightly less, especially on personal loans for a long tenure. The short-term loan is also provided with reasonable interest. At the same time, a credit card bill has more interest than a loan. But there are some time limits of forty-five to fifty days to repay credit card bills. After exceeding the time limit, a penalty is charged. So, the credit card may be beneficial with appropriate use but harmful in case of failure in repayment. The loan is readily available due to digital lending.

Usage of credit cards is possible at any time

The instant usage of credit cards and loans is different. You can use your credit card if you have to book your ticket urgently. It will always be available for your usage. Suppose you visit any shopping complex and are fascinated with some item; you can purchase that using your credit card. But it is not possible with the loan because it will take some time for approval; the credit card may be beneficial whenever you have an instant cash requirement.
A loan can also be used for purchasing many things and various requirements. But it would help if you had a plan because you can get it instantly, but you can’t get it at that time only.
This is the fundamental difference between a credit card and a loan. You need to get a credit card with an outstanding limit once, and then you can use it anywhere or anytime. But to borrow a loan, you must apply whenever you need the loan amount.

Multiple usages of the loan amount

The benefit of a personal loan is that you can use its amount for multiple purposes. There are no restrictions in using a personal loan amount like other loans. You can use it independently as per your requirements. You can borrow a short-term or private loan as per your credit score and salary. After borrowing the loan, you can use its amount for credit card bills, shopping, school fees, medical emergency, travel bills, etc. At the same time, the credit card can be used for shopping or ticket booking. It’s different from using it in other places where only cash is accepted. So, in this perspective, the loan is superior to a credit card. You can pay the loan amount in small EMI also.

The loan is available on EMI and reasonable interest

A personal loan is available on the EMI scheme also, where you can borrow a loan and pay it on EMI. It makes your repayment easy and comfortable. If you have a significant amount requirement and cannot pay it with the salary, you can convert it into multiple EMI. The small amount that can be easy to pay will not create extra pressure on you. You can use the amounts for different usage also. The credit card cannot be used for different options, but there are often no-cost EMI options, offers, and rewards on online shopping. In these cases, a credit card helps a lot to save money. So, it is beneficial from these perspectives.


Overall, loans and credit cards play a similar role in managing funds shortage; you can use this whenever you need cash for different purposes. A personal loan can be used for the arrangement of money. You can use its amount for multiple purposes, and a credit card is beneficial for shopping and ticket booking, especially when you get offers and rewards.
The loan takes significantly less time for approval, but the credit card is always ready for use. In both cases, one must be conscious of the repayment, and you must not exceed the repayment date. Properly using a loan and credit card increases your credit score. But any defaults can lead you to various troubles.
You can choose a loan or credit card according to your convenience.