We have all been in certain situations that require immediate financial attention, be it your friend’s wedding next week or a sudden medical emergency. Life often takes unexpected turns when we are least prepared for them. Such situations call for quick ways to help with financial assistance.
Fortunately, in this digital world, you can find various ways to help you with the financial crisis, including credit cards and online loans. However, each approach, however, offers its own distinct benefits.
In this article, we will talk about what credit cards are, what personal loans are, and which is the preferred way of borrowing money.
What is a Credit Card?
A credit card is like a helpful friend who lends you money when you need it, but charges a fee if you take too long to pay them back. When you use a credit card, you’re borrowing money up to a certain limit. If you repay the full amount on time, there’s no extra cost. But if you delay or pay only part of it, interest starts to build up, and that can get expensive quickly.
Credit cards are super convenient for:
- Small, frequent purchases
- Online shopping
- Emergency payments when you’re out of cash
What is a Personal Loan?
A personal loan is a fixed amount of money you borrow through an online loan app. Such loans are known for their quick financial assistance, without the need for collateral. With the evolution of technologies, applying for a loan online is just a matter of a few minutes.
The loan amount from personal loans can be used for several purposes, like:
- Home repairs or renovations
- Medical emergencies
- Education or wedding expenses
Key Differences Between a Credit Card and a Personal Loan
If you are wondering what is the major difference between these two ways of borrowing money, let’s take a deeper look at this:
| Feature | Credit Card | Personal Loan |
| Type of Credit | Can be used repeatedly | One-time loan (fixed amount) |
| Usage | Daily purchases, online shopping, and emergency spending | Big expenses |
| Repayment | Flexible, minimum payment allowed each month | Fixed monthly EMI (equal payments) |
| Interest Rate | High | Low to Moderate |
| Loan Amount | According to the credit limit set by the bank. | Based on income, credit score, and lender policy |
| Best For | Short-term, small purchases | Long-term, larger expenses |
| Application Process | Pre-approved, or via bank/NBFC | Apply through the bank or an online loan app like True Balance |
| Flexibility | Can be used again after repayment | One-time loan, must reapply if more money is needed |
Long story cut short, if you need a bigger amount of money and prefer to repay it in fixed monthly installments, a personal online loan is the smarter choice. Unlike credit cards, it offers longer repayment periods and comes with lower, more predictable interest rates, making it easier to manage your finances.
Why Personal Loans are a Smart Choice?
When in sudden need of money, personal loans serve as a lifesaver. Such loans can be easily applied for through online loan apps, saving you the hassle of standing in long bank queues. Here’s why it’s recommended over credit cards:
Lower Interest Rates
Credit cards usually have higher interest rates. At the same time, online loans, especially from trusted apps, offer much lower interest, especially if you have a decent credit score.
Larger Loan Amounts
Personal loans offer higher limits than most credit cards, making them perfect for people looking for financial assistance for big needs like home renovation or medical emergencies.
Fewer Chances of Overspending
Having a credit score in your pocket constantly gives you the impression of having quick money at your disposal. It’s quite easy to overspend with cards. It’s usually a “swipe now, worry later” attitude that can be dangerous. A personal loan allows you to borrow a fixed amount, use it responsibly, and repay it through scheduled instalments.
Improves Credit Score
Many people are unaware of the thing that paying the EMIs timely can help you build a good credit history. This helps you further in cracking a good deal on personal loans. Simply put, a strong credit score can help you secure lower interest rates, reducing your overall financial strain.
Wrapping Up
Financial choices are among the most crucial decisions you can make in your lifetime. While a credit card is great for short-term, small purchases, a personal loan from an online loan app is a perfect option for large expenses. However, it’s important to compare the options, various factors, and read the fine print to make a well-informed decision.
If you are looking for a trustworthy online loan app, True Balance is a well-known name in the category. It has disbursed more than 7000 crore loan amounts and has over 30 happy customers. With their competitive interest rates as low as 2.4% per month, you can borrow up to ₹2 lakh, and that too with a longer repayment tenure. True Balance also offers a foreclosure option that can help you maintain a budget.
Install the True Balance loan app now and discover a better way to manage your borrowing needs.
