Sometimes, when you need money for an emergency, the logical solution is to charge it to your credit card. There are a range of credit options but the most popular choices are credit cards and Personal Loans.

A credit card allows you to pay short-term balances on a monthly basis. A Personal Loan may seem cheaper but have to be paid in instalments over short or long periods. Both options may give you what you need, but which one would best suit your circumstances?

Credit Cards

When you’re in dire need of cash, a credit card is the easiest and most accessible solution. We all know how useful this little plastic card can be, but what are the pros and cons of a credit card?


Credit cards are best suited for short-term financing, and can be used to make small purchases when there is no cash at hand. Credit cards also give you perks that cash and debit cards won’t be able to provide. These cards often provide rewards of 1-2% of what you spend. These reward points can then be redeemed against a range of offers and products.

You can also take advantage of interest-free periods where you can purchase your products and pay your debt with no added interest, provided your bills are settled in time.


The use of a credit card might be quick and easy when there are purchases to be made but it is an expensive means of paying credit. The interest rates on monthly payments are often in double digits, and credit cards limit the funds that you have access to. A credit card is not suitable for long-term borrowing as unpaid amounts are subject to large interest rates.

Analysing Personal Loans

A Personal Loan is more complicated than simply charging something to your credit card, however, it is also useful when you are in a financial crunch. Here are the pros and cons of Personal Loans:


Firstly, Personal Loans are better suited to long-term borrowing as they incur lower interest rates than credit cards do. When you apply for a Personal Loan, you will receive a large amount of money that you must repay within a fixed time period - ideally 1-5 years. Lenders like Bajaj Finserv offer loans of up to 25 lakhs. You can negotiate interest rates to bring them down further when you apply for a loan. If you take a secured Personal Loan, you will a lower interest rate than with an unsecured Personal Loan.

Once you have negotiated your rate of interest, it will be fixed and will not fluctuate. This fixed amount allows you to plan and stick to your monthly budget comfortably. This is ideal if you have a fixed income. You don’t have to worry about earning enough money to make the minimum monthly payment that you would have to make with a credit card debt.


The interest rate might be lower than a credit card, but still has higher interest rates than traditional loans as they are usually unsecured. When you do want a secured loan you need to put an asset up as collateral. This object might be lost if you fail to adhere to the Personal Loan repayment scheme.

The Result

Both methods of credit have their advantages and disadvantages. Each is different in terms of payment, debt, and interest rates. A credit card is an easier short-term solution, whereas Personal Loans are more beneficial in the long run.

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