Emergencies never knock — but the cost of quick cash can hit hard if you’re not prepared.
Between instant loans, bank overdrafts, and credit cards, which is the smartest (and cheapest) way to get money fast?
Let’s compare.
Option 1: Instant Personal Loans
✅ Pros:
Disbursed in minutes to hours
Requires basic KYC and credit score
Fixed interest and tenure
Loan amount from ₹10,000 to ₹5,00,000 or more
❌ Cons:
Interest: 10%–24% p.a.
Prepayment or processing charges apply
Late fees and bounce charges are heavy
Best For:
People with a decent credit score needing lump-sum emergency funds.
Option 2: Bank Overdraft (OD) Facility
An overdraft lets you withdraw more than your account balance — up to a limit set by your bank.
✅ Pros:
Interest charged only on amount used
Lower interest than credit cards
Great for freelancers and self-employed
❌ Cons:
Interest: 8%–16% p.a. (varies)
Not available to everyone
Collateral may be needed for large ODs
Best For:
Existing bank customers with regular inflow or businesses with working capital needs.
Option 3: Credit Card
A swipe away from instant spending — but costly if not paid on time.
✅ Pros:
Up to 45 days interest-free if paid in full
Easy to use in physical and online emergencies
Reward points, cashback
❌ Cons:
Interest: 24%–42% p.a. on outstanding balance
Minimum due trap = debt spiral
Cash advance attracts fees & no interest-free period
Best For:
Short-term liquidity, if repaid within due date. Dangerous if carried forward.
Side-by-Side Comparison Table
| Feature | Instant Loan | Overdraft | Credit Card |
|---|---|---|---|
| Interest Rate | 10%–24% p.a. | 8%–16% p.a. | 24%–42% p.a. |
| Disbursal Time | Few hours | Instant (once set) | Instant |
| Interest-Free | ❌ | ❌ | ✅ (up to 45 days) |
| Max Tenure | 6–60 months | Flexible | Monthly revolving |
| Repayment Mode | EMI | Pay as you use | Full or minimum due |
| Penalty Charges | High | Moderate | Very High |
| Credit Score Impact | High | Moderate | Very High |
Conclusion: What’s Cheaper Depends on One Factor — How Fast You Repay
Overdraft is cheapest if available, especially for short-term use.
Instant loan is better for planned repayment and larger needs.
Credit card is okay only if you pay in full on time. Else, it’s the costliest.
Golden Rule:
In emergencies, borrow responsibly. Don’t convert a crisis into a debt trap.
FAQs
Q1: Can I get an instant personal loan without a salary slip?
Yes, fintech apps offer alternatives based on bank statements or credit history.
Q2: Does using an overdraft hurt my credit score?
Only if you default. Responsible use builds credibility.
Q3: What is the interest on credit card cash withdrawal?
Typically 2.5%–3.5% per month (30%+ annually) from day one, with an additional transaction fee.
Published on : 2nd August
Published by : SMITA
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