Personal Loan vs Credit Card: Which Is Cheaper?
By Dheeraj Yadav • September 7, 2026 • 1 min read
The Core Difference
A personal loan gives you a fixed lump sum repaid in equal instalments over a set tenure, usually at 10-24% annual interest. A credit card lets you borrow repeatedly up to a limit, but carrying a balance past the due date attracts 30-45% annual interest — nearly double a personal loan.
When a Personal Loan Wins
For a large, planned expense (wedding, medical bill, debt consolidation) a personal loan is almost always cheaper. The fixed EMI also forces disciplined repayment, unlike a credit card where minimum-due payments can quietly balloon your outstanding balance for years.
When a Credit Card Makes Sense
For short-term borrowing you can clear within the interest-free period (usually 20-50 days from purchase), a credit card costs nothing extra and often earns cashback or reward points — a personal loan has no such grace period.
Hidden Costs to Check
- Processing fees (0.5-3% of loan amount) on personal loans
- Prepayment/foreclosure charges on both products
- Annual/joining fees on premium cards
- Credit card cash withdrawal charges, which are especially high
Use our Loan Calculator and EMI Calculator to compare the real total cost before deciding.
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