Credit Card vs Flexi Loan for CAs – Which is better?

A Flexi Loan for chartered accountants is a tailor-made offering. With a Flexi Loan, you can borrow as you want and repay whenever you have extra cash on you at no additional cost. You pay interest only on the amount that you use with an option of EMIs carrying only the interest component.

Credit cards and a Flexi Loan for chartered accountants have very similar benefits and offerings. Both these means of finance are unsecured, offer flexibility of use and need basic documents to procure the funds. However, being a chartered accountant (CA), you are always smart with money and would want to settle for the best mode of finance. The below-listed parameters will aid CAs in making a sound purchase decision.

1. Financial objective

The choice between a credit card and a personal loan depends on your financial objectives. If you require funds for meeting daily expenses or monthly bills/ expenses that you need to pay by a due date such as paying for utilities, rent, etc. you can opt for a credit card. You may need capital for long-term needs such as expanding and deploying advanced accounting software, opening a branch office or hiring specialised professionals. In such cases, a personal loan is your best bet.

For example, if you need to pay someone in cash, swiping your credit card may not be possible. A wedding in your family may have expenses requiring you to pay mainly in cash. Your vendors would prefer payment in cash (you may also be eligible for cash discounts on the same). A credit card comes in handy if you want to pay someone immediately, and do not have cash on you. A Flexi Loan for chartered accountants, however, can be disbursed to your account in 48 hours* and helps you achieve your short or long-term personal and professional goals.

2. Repayment ease

Before opting for a loan, you need to figure out the repayment strategy. While a credit card offers you instant funds, it comes with a short repayment tenure. Usually, you have to pay the outstanding bill on your credit card by a month.

Contrasting to this, a personal loan offers you a longer tenure. The repayment tenure for unsecured personal loans for CAs can be up to 96 months.

A wide tenure gives you the option to spread your EMIs according to your income, making repayment a hassle-free process. With online access, you can easily track your loan activity from anywhere within a few clicks.

3. Amount of money

The amount of money approved in a personal loan for a CA is much higher than the credit limit offered by credit cards. If you apply for an unsecured CA loan, the loan amount can go up to as high as Rs. 80 lakh.

Procuring such a huge amount of money through a credit card is a tall order. The credit limit on a credit card depends on factors such as:

• Gross monthly salary
• Debt-burden ratio
• Spending patterns
• Credit policy of the lender

For addressing your long-term goals, you need a huge amount of finance. You can address those goals easily through personal loans.

4. Rate of Interest

Rate of interest is one of the prime considerations before choosing a finance option. A high-interest rate pushes up your expenses, affecting your monthly cash outflow.

Credit cards are one of the most expensive means of financing. As soon as you withdraw cash from your credit card, it is charged at a very high rate of interest. For point-of-sale payments, the interest rate remains high if the outstanding bill is not cleared before the due date. Flexi Loan for chartered accountants comes with interest rates ranging from 11% per annum to 22% per annum.

A Flexi Loan also helps you keep a check on your monthly expenditure and minimises chances of you over-spending.

The choice

The table given below summarises the key difference between a credit card and a personal loan.