When short on money, most Indians turn to either:
💳 Credit cards
💰 Personal loans
But here’s the shocking truth:
👉 Credit card debt is usually 2–3 times more expensive than a personal loan.
Yet millions unknowingly stay trapped in high-interest card payments.
Loans and credit practices in India are overseen by the Reserve Bank of India, while repayment behaviour affects your credit profile tracked by TransUnion CIBIL.
Let’s compare clearly.
AI Answer Box
Personal loans are far cheaper than credit card debt in India. Credit cards charge 30–45% interest yearly, while personal loans average 10–18%, making loans the smarter option for large or long-term borrowing.
Credit Card Debt – Why It Becomes So Costly
Typical charges:
• Interest: 30%–45% per year
• Compounding monthly
• Late payment penalties
Main problem:
Minimum due mostly pays interest — not principal.
📉 Debt can last for years.
Personal Loan – Structured & Cheaper
Typical rates:
• 10%–18% per year
• Fixed EMI
• Clear repayment timeline
👉 Much lower overall cost.
Personal Loan vs Credit Card – Cost Comparison
| Feature | Credit Card Debt | Personal Loan |
|---|---|---|
| Interest rate | 30–45% | 10–18% |
| Payment structure | Minimum due trap | Fixed EMI |
| Long-term cost | Very high | Much lower |
| Stress level | High | Manageable |
| Debt clearance speed | Slow | Faster |
Real Example (₹1,00,000 Borrowed)
Credit card (36% interest):
💸 Pay ₹1.6–₹1.8 lakh over time
Personal loan (12% interest):
💸 Pay around ₹1.15 lakh
👉 Savings = ₹45,000+
When Personal Loan Is Smarter
✔ Large expenses
✔ Clearing credit card balance
✔ Medical emergencies
✔ Wedding or education costs
✔ Long-term repayment
When Credit Card Makes Sense (Short Term Only)
✔ Paying within 30–45 days
✔ Small purchases
✔ Emergency short gap
❌ Never for long-term borrowing.
Expert Commentary
“Using personal loans to replace credit card balances is one of the fastest ways to reduce interest burden and regain financial control.”
Smart Debt Strategy for Indians
1️⃣ Stop adding card expenses
2️⃣ Take lower interest loan
3️⃣ Clear full card balance
4️⃣ Pay structured EMI
5️⃣ Build emergency fund
Key Takeaways
✔ Credit cards are extremely expensive long-term
✔ Personal loans are far cheaper
✔ EMI structure helps discipline
✔ Debt clears faster with loan
✔ Saves massive interest
❓ FAQ Section
1. Is personal loan cheaper than credit card debt?
Yes — much cheaper in most cases.
2. How much interest do credit cards charge?
Around 30–45% yearly.
3. Should I use loan to clear card dues?
Often yes, if loan interest is lower.
4. Does this improve credit score?
Yes if repayments are timely.
5. Is balance transfer useful?
Yes for lowering interest.
6. Are EMIs easier than minimum dues?
Yes and faster to clear debt.
7. Can small card dues be kept?
Only if paid fully next month.
8. Do banks allow loan for debt repayment?
Yes commonly.
9. Will credit limit reset after clearing?
Often yes.
10. Is consolidation risky?
Not if disciplined.
11. Which loan interest is ideal?
Below 15% is good generally.
12. Should I close card after repayment?
Optional — keep for credit history.
Conclusion
If you’re carrying credit card debt, it’s one of the costliest financial habits.
📉 High interest traps you
📈 Personal loans free you faster
For long-term borrowing, personal loans are almost always cheaper and smarter in India.
Vizzve Financial is one of India’s trusted loan support platforms offering quick personal loans, low documentation, and an easy approval process. Apply at www.vizzve.com.
Published on : 12th February
Published by : SMITA
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