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2 mins Read | 1 Year Ago

Credit Cards vs Personal Loan: Which is Better for Short-term Goals?

5 important points while spending on a Cashback Credit Card


When it comes to meeting that short-term money crunch, two of the most viable financial tools are Personal Loans and Credit Cards. Both have their own advantages and you may find it difficult to choose the one that suits your short-term goals.

You need to understand the difference between the two.

What is Credit Card?

A Credit Card is a piece of metal or plastic that you use to make purchases and pay off your debt later on a specific payment due date. It is a revolving credit, which means you can spend your money, pay off your debt and repeat the cycle as long as you stay within your Credit Card limit.

What is a Personal Loan?

A Personal Loan is a type of Unsecured Loan. A direct deposit into your account has to be repaid with an interest rate over a predetermined period of time. As Personal Loans are not revolving, it ends after you repay your loan completely.

Quick facts and comparison: Credit Cards vs Personal Loans


Credit cards

Personal loan

How to use them?

Pay later, buy now.

Pay later, buy now.

How these work?

Get a limited revolving credit.

Get a one-time amount.

Annual Percentage Rate (APR)

The Credit Card interest rate varies depending on the Card you choose from ICICI Bank.

Interest rates start from <10.75>% p.a. at ICICI Bank.

Monthly Payments

Monthly payments are variable based on the amount you spent in one billing cycle.

Depends on the loan tenure you choose for paying the EMIs.

Credit Building

It is helpful in credit building.

It is helpful in credit building.

Loan Amount

The Credit Card limit is decided on the basis of your income and other factors.

Avail a Personal Loan of up to Rs 25 lakh, considering your eligibility and other factors.


Credit Cards or Personal Loans: Which one to go for?

Both Personal Loans and Credit Cards have their individual purposes and are beneficial. However, the best choice rests on your requirements.

A Credit Card limit enables you to continue using the card even after paying the bill every month. Also, the interest on a Credit Card is suitable for daily purchases and to earn rewards on every purchase.

However, check your Personal Loan eligibility when you want to make major purchases. Personal Loans help you meet bigger expenses and are a better choice as it offers a longer tenure of up to 5 years.

In terms of debt consolidation, it is hard to point out a specific option between a Personal Loan and a Credit Card. You will have to calculate to determine the best option.

The endnote

If you are still unsure about which option to choose or about your Credit Card eligibility, get in touch with ICICI Bank’s financial advisor for the right guidance.


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