Personal Loan vs Credit Card: Which Is Cheaper for Big Expenses?

When a large expense comes up — a wedding, a medical bill or a home renovation — the two quickest options are usually a personal loan or your credit card. They work very differently, and the wrong choice can cost you thousands.

Interest rates

Credit card revolving interest runs at roughly 36–45% a year. Personal loans typically range from 10.5% to 24%. For anything you can't repay within the interest-free period, a personal loan is almost always cheaper.

When a credit card wins

• You can repay the full amount within the 45–50 day interest-free period.
• The purchase qualifies for a no-cost EMI offer.
• You need a small amount for a short time.

When a personal loan wins

• The amount is large and repayment will take more than a few months.
• You want a fixed EMI and a clear end date.
• You're consolidating several high-interest card balances.

Example

₹2,00,000 repaid over 24 months: at 12% on a personal loan the EMI is about ₹9,415, with total interest of around ₹26,000. Revolving the same amount on a card at 42% can cost more than ₹90,000 in interest.