Personal Loan or Credit Card: When should you opt for it?

If you are planning on purchasing high priced products and are worried about dipping into your savings, you don’t need to worry.

You can now borrow funds from your bank for this purpose.

You can choose a Personal Loan which could be either secured or unsecured and is mainly used for long term financing. A  Credit Card is an instrument provided by the bank to ensure your daily purchase experience is smooth without any hassles.

Either through the service of a Personal Loan or usage of a Credit Card, you can easily borrow the required funds and repay it within a fixed time, either in fixed instalments known as EMIs or monthly bills respectively.

Personal Loan or Credit Card – which one is better?

 Every particular situation of ours differs from the other. While a Personal Loan might be the right choice for one situation, a Credit Card could prove more suitable and affordable in another or third situation, or neither of them would be a suitable bet for someone.

The two main questions to ask before choosing the right one are :

  • What do you need the funds for?

    If you need funds for a quantifiable purchase, then a Personal Loan may be your best bet.  However, if you need continued access to credit, then a Credit Card may be more suitable.
  • How do you manage your repayments:

    Personal Loan vs Credit Card, both have their end dates. A Credit Card is an ongoing form of credit, whereas a Personal Loan comes with a stipulated time and end date. Depending on your self-discipline with your expenses, you should select a suitable one for you.

What is the difference between a Credit Card loan vs  Personal Loan?

 How can you benefit from it?

Read through our guide to choose the best financing option for you.


Personal Loan

Credit Card


A loan is for a range of uses, such as medical expenses, children’s education, wedding, home renovation etc.

Small and large purchases for business or personal needs.

How to borrow

By applying to a bank or financial institution with  the required documentation

By using Credit Card in-store or online.


The amount is  provided to the customer as lump-sum.

Paid directly to the merchant on swiping the card.


As EMIs to the bank or financial institution for a specified tenure

Paid by the customer at the expiration of  the credit period


Usually from one year  to five years

Interest-free credit period, generally up to 45 days

Borrowing limit

Calculated by the bank based on the proof of income, credit worthiness etc.

The predetermined monthly credit limit

Interest rates

 Competitive in comparison to cards after free credit period (i.e. beyond due date)

Marginally higher than personal loans in case of delayed or part payments

Credit Card loan vs Personal Loan – the purchase suitability.

When to buy via a Credit Card

  • When you want to buy something within your credit limit
  • When you have sufficient Credit Card limit for a larger purchase.
  • When you want to purchase instore or online.
  • When you are not eligible for a Personal Loan.

When to buy via Personal Loan

  • When you need a substantial amount of money higher than your Credit Card limit.
  • When you are planning a large purchase that you want to pay over sometime
  • When you need to pay a business or person who does not accept Credit Cards.

Do remember that you can always use your Credit Card for your needs over and above your Personal Loan sanctioned amount.

No matter what your need HDFC Bank has a solution for you – be it a Personal Loan or a Credit Card. So apply for personal loan or apply for a credit card now!

Read more about the ways to choose the best Personal Loan.

* Terms & conditions apply. Personal Loan disbursal at the sole discretion of HDFC Bank Ltd. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.