Credit card EMIs are a great way to make purchases and pay them in instalments. However, not all transactions can be converted into instalments. Lenders usually allow instant instalment conversion, but you should do it within 30-60 days of the purchase. It’s important to note that credit card instalment transactions come with an interest rate of 13%-18% per year, which can be quite high.
On the other hand, Personal Loan instalments also come with similar interest rates. Therefore, as someone who values their hard-earned money, it’s important to compare the two options and choose the right one. Check out this article to learn more about Personal Loan EMI and credit card instalment differences.
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Small EMI amounts
Personal Loans and credit cards both offer the option to pay off your outstanding balance in the form of EMIs. However, there are some key differences between the two.
- Personal Loan EMIs are generally designed for larger expenses such as home renovations, medical bills, or wedding expenses. The interest rates on Personal Loans are usually lower than credit card interest rates, and the loan amount is disbursed in a lump sum. Personal Loans also have a fixed repayment schedule, meaning you will know exactly how much you need to pay each month.
- Credit card EMIs, on the other hand, are usually used for smaller expenses such as electronics or clothing purchases. The interest rates on credit card EMIs are higher than Personal Loan interest rates, and the repayment tenure is more flexible. You can choose to pay off the entire balance at once or in smaller instalments over a while. The same will be reflected on your credit card statement.
Affordable Interest Rate
When choosing between Personal Loans and credit card EMIs, one factor that plays a crucial role is the interest rate. Both personal loans and credit card EMIs come with interest rates, and it’s essential to compare them to make an informed decision.
Personal Loans usually have lower interest rates than credit card EMIs. The interest rates on Personal Loans can range from 10%-16% per annum, depending on the lender and your credit score. On the other hand, credit card EMIs come with an interest rate of 13%-18% per year, which can be pretty high.
In short, a Personal Loan might be a better option if you’re looking for an affordable interest rate.
Flexible Repayment Tenure
When it comes to repayment tenure, Personal Loan EMIs usually have a longer tenure than credit card EMIs. Personal Loans can have a repayment tenure of up to 6 years, depending on the loan amount and the lender’s terms and conditions. On the other hand, credit card EMIs usually have a shorter repayment tenure, ranging from 3 months to 2 years.
While a longer repayment tenure may seem attractive as it reduces the monthly EMI amount, it’s important to note that it also increases the overall interest paid on the loan. Therefore, it’s important to choose a repayment tenure suitable to your financial goals and capabilities and ensure you make timely payments to avoid any penalties or additional charges.
Conclusion
Both credit card EMIs and Personal Loans have their advantages and disadvantages. While credit card EMIs offer flexibility and convenience, Personal Loans provide lower interest rates and longer repayment tenures. Evaluating your financial situation and goals is important before deciding between the two.
Always compare interest rates, processing fees, and repayment tenures before opting for either option. With careful consideration and timely payments, you can make the most of your financial choices and achieve your goals.
