17,000 new credit cards issued by ICICI linked to wrong users

Are you among those who is in urgent need of money due to some unavoidable circumstances and not willing to dip into your emergency fund? Then, you can either go for a personal loan or a credit card loan. Both come with its set of advantages and features and depending on your requirement, you can choose accordingly.

Personal loan

A personal loan is a multipurpose and unsecured loan with a fixed rate of Interest, taken by individuals from a bank or a non-banking financial company (NBFC) for a given tenure of between 12 and 60 months to meet their personal needs. It is provided on the basis of key criteria such as income level, credit and employment history, repayment capacity, etc. A salaried individual can get a personal loan easily than a self-employed individual.

Credit card loan

Credit card loan is a credit borrowing facility for credit card users that allows taking loans on the credit limit set for the user. This means that customers get an amount as a loan in terms of an extended credit limit or can use the unused credit as a loan amount. After the approval of the loan, the extended limit is credited to the card. However, banks charge a higher rate of interest in this case.

Here’s a comparison:

— If you want to take a personal loan, then you have to submit your documents and complete the verification process. But in the case of a credit card loan, you do not need to submit any document as the credit card you hold contains necessary information.

— You can apply for a personal loan from any bank but you can take a credit card loan from the same financial entity of which you hold the credit card.

— Credit card loans can be taken only up to the limit of credit cards, whereas you can borrow a larger amount with the help of a personal loan.

— Duration of a personal loan is longer than a credit card loan. One can take a personal loan for a maximum of 5 years. Loans against credit cards can be maximum of up to 24 months.

— Personal loans are taken for a range of purposes, such as medical expenses, children’s education, wedding, home renovation, etc. While credit card loans are generally taken for small and big purchases for business or personal needs for shorter periods.

— The common thing in both is that both are an unsecured loan, hence you do not require to pledge any collateral.

— Usually, personal loans come with an 8.45-36% interest rate while credit card loans come with an interest rate of 0-35% depending on various conditions. However, another key factor is that credit card loans can be availed at flat interest rates, while personal loans are available with reducing balance rates.

Identifying the right credit option is based on one’s financial situation and needs. So, if you are the one who needs a smaller amount for a shorter period then go for a credit card loan. While you can opt for a personal loan if you need a larger sum and longer repayment tenure.