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Credit card loan vs. Personal Loan: which is better?

  • Highlights

  • Personal loans and credit card loans are unsecured

  • Credit card loan is offered against the credit limit

  • Credit card loan is suitable for small funding needs

  • SuperCard offers a 90-day interest-free loan

Emergencies can come in all shapes and sizes, from medical treatment to machinery breakdown. At such times, instead of dipping into your savings or breaking your investments, you can turn to loans and meet the requirement with ease. Two of the most common loans that are the best fit for emergencies are personal and credit card loans.

Though both of these are unsecured lines of credit, there are a number of pointers that differentiate a credit card loan from a personal loan. So, if you need to choose between a personal loan or credit card loan, read how they differ from each other in order to make an informed decision.

Personal loan vs. credit card loan


A personal loan is a collateral-free loan that lenders offer based on your credit profile and eligibility. Some lenders require you to be an existing customer in order to apply for a personal loan.

Conversely, a credit card loan is offered against your card’s credit limit. This means that you can apply for a loan against credit card only with your card’s issuer.


In order to qualify for a personal loan, lenders require you to meet certain eligibility criteria that help them gauge your repayment ability. These criteria vary from lender to lender and relate to your credit score age, income, employment, and more.

On the other hand, credit card companies offer a credit card loan to select cardholders only. Once eligible, you don’t have to meet any criteria, for the simple reason that the loan is offered to you against your card’s credit limit.

Additional Read: Credit card against fd

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In addition to meeting eligibility criteria, lenders offering personal loans also require certain documentation. These documents are used to prove your eligibility and repayment ability. Thus, submitting them in a single go accelerates your approval. Typically, lenders ask for identity proof, address proof, and income proof.

In contrast, since a credit card loan is offered against your card’s limit, you don’t have to produce any documentation.

Approval time

The approval timeframe for a personal loan depends on the lender you select. While certain traditional lenders may take up to a week to process your loan, leading NBFCs like Bajaj Finserv offer disbursal within 24 hours.

Credit card companies approve credit card loans in no time as the loan is granted against your credit limit. Thanks to this, you can access the loan almost instantly and meet your requirements without any delays.

Loan amount

In case of a personal loan, you can request for your chosen loan amount as per your requirement. The lender then evaluates your credit profile and repayment ability and offers a sanction accordingly. Since the sanction is relatively higher, a personal loan is suitable to meet big-ticket expenses like renovating a home, taking an overseas vacation and the like.

However, in case of credit card loan, the issuer offers you a pre-approved loan amount. The issuer quotes this limit after evaluating your available credit and repayment history. That said, you can borrow a loan amount of up to the pre-approved limit only. Since the sanction is relatively lower, credit card loan is best suited to meet small funding requirements like paying your child’s tuition fees, buying consumer durables for your home, and more.

Loan tenor

Typically, personal loans have a repayment tenor ranging from 12 to 60 months. Given the relatively larger sanction that a personal loan offers, the longer tenor allows you to repay the loan in convenient EMIs. Lenders also allow you to prepay your loan in case you have sufficient funds to do so.

A loan on a credit card, on the other hand, is typically offered for a shorter period. Having said that, irrespective of the pre-approved sanction, it is important you avail a loan amount that you can easily repay, without overstepping your budget. Also, note that your issuers don’t allow you to make prepayments against credit card loan. Further, you may not be able to use your card for cash withdrawals until you repay your loan.

Interest rate

Personal loan interest rates are relatively lower than those charged on a loan against credit card. Issuers charge such interest on reducing balance. Also, the interest rate fluctuates as per the market conditions.

Conversely, the interest on a loan against credit card is charged on a flat rate that the issuer informs you when you apply for it.

With a fair idea of a credit card loan vs. a personal loan, you can now choose the one that suits you the best. If you don’t own a credit card yet, apply right away to be prepared for emergencies. Consider availing one of the best international credit cards, the Bajaj Finserv RBL Bank SuperCard that allows you to avail a 90-day interest-free emergency loan. This way, you can meet your emergencies without breaking the bank. Apart from this, you can also address quick cash requirements via 50-day interest-free ATM withdrawals. Check your pre-approved credit card offer to view your customised deal and enjoy a hassle-free one-step online approval.

Additional Read: kisan Credit Card

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