{"@context":"https:\/\/schema.org\/","@type":"BlogPosting","@id":"https:\/\/www.indusind.com\/iblogs\/personal-loan\/credit-card-loan-vs-personal-loan\/#BlogPosting","mainEntityOfPage":"https:\/\/www.indusind.com\/iblogs\/personal-loan\/credit-card-loan-vs-personal-loan\/","headline":"Credit Card Loan Vs Personal Loan: Know the Differences & Benefits","name":"Credit Card Loan Vs Personal Loan: Know the Differences & Benefits","description":"Loans are a crucial part of financial planning, helping individuals manage expenses, emergencies, and lifestyle upgrades. However, choosing the right type of loan can be confusing. Credit card loan and personal loan both options provide quick access to funds but differ in terms of eligibility, interest rates, repayment terms, and flexibility. This guide will help...","datePublished":"2024-08-01","dateModified":"2025-03-13","author":{"@type":"Person","@id":"https:\/\/www.indusind.com\/iblogs\/author\/indusind\/#Person","name":"IndusInd Bank","url":"https:\/\/www.indusind.com\/iblogs\/author\/indusind\/","image":{"@type":"ImageObject","@id":"https:\/\/secure.gravatar.com\/avatar\/8169561f34fb61e737060f1a537a86e2?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/8169561f34fb61e737060f1a537a86e2?s=96&d=mm&r=g","height":96,"width":96}},"publisher":{"@type":"Organization","name":"IndusInd","logo":{"@type":"ImageObject","@id":"https:\/\/www.indusind.com\/iblogs\/wp-content\/uploads\/logo-2.png","url":"https:\/\/www.indusind.com\/iblogs\/wp-content\/uploads\/logo-2.png","width":201,"height":86}},"image":{"@type":"ImageObject","@id":"https:\/\/www.indusind.com\/iblogs\/wp-content\/uploads\/credit-card-loan-min.jpg","url":"https:\/\/www.indusind.com\/iblogs\/wp-content\/uploads\/credit-card-loan-min.jpg","height":288,"width":764},"url":"https:\/\/www.indusind.com\/iblogs\/personal-loan\/credit-card-loan-vs-personal-loan\/","about":["Personal Loan"],"wordCount":1513,"articleBody":"Loans are a crucial part of financial planning, helping individuals manage expenses, emergencies, and lifestyle upgrades. However, choosing the right type of loan can be confusing. Credit card loan and personal loan both options provide quick access to funds but differ in terms of eligibility, interest rates, repayment terms, and flexibility.This guide will help you understand the key differences and benefits of credit card loans vs personal loans so that you can make an informed financial decision.What is a Credit Card Loan?A credit card loan is a pre-approved loan that allows you to borrow money against your existing credit card limit. It is offered by banks and financial institutions to cardholders with a good credit history.Features of a Credit Card LoanInstant Loan Approval \u2013 Since you already have a credit card, the bank does not require extensive verification.No Additional Documentation \u2013 Unlike personal loans, no extra paperwork is needed.Fixed Interest Rate \u2013 The interest rate is usually lower than the revolving credit card interest, but higher than personal loans.Flexible Repayment Tenure \u2013 Repayment terms generally range from 3 months to 5 years, depending on the bank.No Impact on Credit Utilization \u2013 The loan amount is treated separately from your credit card spending limit.Available to Select Cardholders \u2013 Not everyone can get a credit card loan; it depends on the bank\u2019s discretion and your creditworthiness.What is a Personal Loan?A personal loan is an unsecured loan provided by banks, NBFCs, or fintech lenders. It can be used for any purpose, such as travel, medical emergencies, weddings, or debt consolidation.Features of a Personal LoanNo Collateral Required \u2013 Unlike home or car loans, personal loans do not require security.Higher Loan Amounts \u2013 You can borrow amounts ranging from \u20b950,000 to \u20b95lakhs, depending on your credit profile.Lower Interest Rates \u2013 Generally, personal loans have lower interest rates compared to credit card loans.Longer Repayment Tenure \u2013 You can repay the loan in 12 to 60 months (1 to 5 years).EMI-based Repayment \u2013 Fixed monthly EMIs make it easier to plan finances.Available to Salaried & Self-Employed Individuals \u2013 Loan eligibility depends on income stability, employment status, and CIBIL score.Credit Card Loan vs. Personal Loan: Key DifferencesFactorPersonal LoanCredit Card LoanApproval ProcessDisbursal may take a few daysQuick approvals & disbursalInterest RatesReducing balance rates: Interest component decreases as the principal is paid.Higher rate as compared to personal loanCollateralUnsecured (no collateral required)Unsecured (no collateral required)Loan TenureSuitable for long repayment tenureSuitable for shorter repayment tenureLoan AmountSuitable for substantial amountsSuitable for smaller amountsRecord- KeepingSome lenders may require documentationMinimal to no documentation requiredWhen to Use a Personal Loan?Personal loans are better suited for large-ticket purchases. Explained below are some situations where a personal loan might be right:A personal loan is an option one can consider during unforeseen medical costs that exceed medical insurance limits. These are convenient for handling medical emergencies despite their high rates.Nowadays, it is possible to merge several loans by applying for a personal loan. It enables you to combine all debts into a single loan and repay more conveniently.Individuals who are getting married or planning to study abroad.You can also use a Personal Loan calculator to get an idea of monthly payments and overall interest should you take a personal loan. This tool provides a clear picture of your repayment schedule and total cost.Also read: How to Use Personal Loan for Career DevelopmentWhen to Use a Credit Card Loan?A credit card loan is ideal when you need quick funds for short-term emergencies, have a limited borrowing requirement (small loan amounts), or if you’re getting a low-interest rate offer from the bank.However, since credit card loans carry higher interest rates, they are not ideal for large expenses or long-term financing.How to Apply for a Personal Loan?Applying for a personal loan is a straightforward process.Check Your Eligibility \u2013 Visit your bank\u2019s website or a loan aggregator platform to check eligibility.Compare Interest Rates \u2013 Different lenders offer varying rates. Choose the best deal.Submit Your Application \u2013 Fill out the online or offline application form.Provide Required Documents \u2013 Generally includes:PAN & Aadhaar cardSalary slips or income proofBank statements (last 3-6 months)Loan Approval & Disbursement \u2013 If approved, the loan amount is credited to your bank account within 24-48 hours.Leading lenders like IndusInd Bank offer 100% digital instant personal loan with no requirement of income proof or other physical documents. How to Apply for a Credit Card Loan?Since a credit card loan is pre-approved, applying is even simpler.Check Your Eligibility \u2013 Log in to your net banking account or check with customer support.Apply via Net Banking or App \u2013 Banks provide an instant loan option in credit card sections.Choose the Loan Amount & Tenure \u2013 The bank will display the available loan amount.Confirm and Accept the Offer \u2013 Once confirmed, the loan amount is transferred directly to your account.Repay as Per EMI Schedule \u2013 The loan is added to your monthly credit card bill as EMIs.Summing UpBoth credit card loans and personal loans offer financial flexibility, but serve different needs.A credit card loan is suitable for quick, short-term borrowing.A personal loan is better for long-term financial needs with lower interest rates.Before choosing, compare interest rates, repayment tenure, and loan amount to select the option that best fits your financial situation.Share This:"}