Personal Loan vs Credit Card Loan: Which Is Better in 2025?

Table of Contents

Introduction

When it comes to borrowing money in 2025, many people are stuck between two choices — Personal Loan vs Credit Card Loan. While both help you in times of need, they serve different purposes and come with their own pros and cons.

Whether you want to fund a wedding, pay medical bills, or cover emergency expenses, choosing the right loan product can save you money, stress, and time. In this blog post, we’ll break down the differences between a personal loan vs credit card loan, and help you decide which one suits your needs in 2025.

🔄 What’s the Difference?

✅ Personal Loan

A personal loan is an unsecured loan provided by banks or financial institutions. You repay it in fixed EMIs over a set tenure. It’s ideal for planned or big expenses like a wedding, home renovation, or debt consolidation.

✅ Credit Card Loan

A credit card loan, on the other hand, allows you to convert your credit card dues or purchases into EMIs. It’s faster to access but often comes with higher interest rates, and it’s limited by your card’s credit limit.

📊 Comparison Table: Personal Loan vs Credit Card Loan

Feature	Personal Loan	Credit Card Loan
Loan Amount	₹50,000 to ₹50 lakh+	Within credit limit (₹50k–₹5 lakh)
Interest Rate	9.99% to 24% p.a.	30% to 48% p.a. + 18% GST
Tenure	1 to 5 years (some up to 7 years)	3 to 24 months
Processing Time	1 to 7 working days	1 to 2 hours if pre-approved
Collateral Required	No	No
Repayment Flexibility	Fixed monthly EMIs	EMIs or lump sum on due date
Best For	Large, planned expenses	Urgent short-term borrowing

Interest Rates in 2025

One of the biggest factors in deciding between a personal loan vs credit card loan is the interest rate.

Personal Loans from top banks start at 9.99% per annum for salaried individuals with a good credit score.
Credit Card Loans usually charge monthly interest of 2.5% to 4%, which becomes 30% to 48% annually, plus 18% GST on interest.

✅ Verdict: Personal loans are cheaper if you’re borrowing for longer than 3–6 months.

Also Read :-How To Apply Personal Loan? How To Take Loan ?

⏱️ Speed and Convenience

Credit Card Loans win when it comes to instant access. You can convert large purchases into EMIs right from your mobile app.
Personal Loans require more documentation — ID, income proof, and bank statements — and take 1–3 days or more to be disbursed.

✅ Verdict: If speed is the priority, credit card loans are better. But only for short-term needs.

🧾 Repayment Flexibility

When comparing personal loan vs credit card loan, you must consider how you’ll repay the money.

Personal loans come with fixed EMIs, so you know exactly how much you’re paying every month.
Credit card loans may fluctuate based on your usage, interest, and minimum payment due. If unpaid, interest snowballs fast.

✅ Verdict: If you need structured repayment and long-term planning, personal loans are the better choice.

Credit Score Impact

Both options affect your CIBIL score, but in different ways.

Personal loans help build a credit profile if paid on time.
Credit card loans can improve or damage your score — especially if you only pay the minimum amount or carry high balances.

✅ Verdict: For long-term credit health, personal loans offer more stability.

📌 When Should You Choose What?

Choose a Personal Loan if:

You need ₹1 lakh or more.
You want to repay over 1–5 years.
You’re looking for lower interest and fixed EMIs.
You’re consolidating multiple debts.

Choose a Credit Card Loan if:

You need funds instantly.
Your borrowing amount is small (below ₹1 lakh).
You have a pre-approved EMI offer.
You can repay in under 6 months.

Real User Tips

💬 “Never take a loan on a credit card unless it’s urgent. GST on interest makes it more expensive than it looks.” – Reddit user

💬 “I got a personal loan from HDFC at 10.25%. Much better than my card’s 36% interest!” – Personal finance forum

🔚 Final Thoughts: Which One Wins in 2025?

The answer to “Personal Loan vs Credit Card Loan” depends on how much you need, how fast, and how long you want to repay it.

For big goals and better rates → Personal Loan wins
For emergencies and speed → Credit Card Loan works, but use cautiously

❓FAQ Section

Q. Is a credit card loan cheaper than a personal loan?
No. Credit card loans generally carry higher interest and GST charges.

Q. Can I convert my personal loan to a credit card loan?
No, but you can pay your credit card bill using a personal loan.

Q. Will applying for a personal loan hurt my credit score?
Only slightly during application. Timely repayment improves it.