Instant Loan Or Credit Card? How To Ensure You Make Right Choice

Credit cards offer a revolving line of credit with a predetermined limit that can be reused as long as the outstanding balance is cleared. This limit is decided by factors, such as the borrower's monthly income and credit history. 

In contrast, an instant personal loan provides a one-time lump sum disbursement with a fixed amount set at the time of application. The loan limit for instant loans depends on factors like your credit report and debt-to-credit ratio. 

If you need a small amount, a credit card is a convenient option. However, for larger expenses, an instant loan is often seen as a better choice by financial experts.

You can use a credit card only if the merchant accepts card payments. If they don't have a card terminal, you'll need to pay in cash. However, withdrawing cash using a credit card incurs high-interest charges.

In contrast, an instant loan is credited directly to your bank account, allowing you to make payments via debit card or cash without such restrictions.

Credit card debt is revolving, meaning repayment is open-ended. The due amount fluctuates based on the outstanding balance, interest charges and any new spending, allowing flexibility but potentially leading to higher costs if not managed well.

In contrast, an instant loan follows a fixed instalment structure, requiring you to pay a predetermined amount each month at a fixed interest rate. This ensures predictability in repayments, making it easier to budget and plan your finances.

A credit card is more appropriate for small expenses that can be repaid in 30 to 45 days. In such cases, you won't typically have to pay any extra charge. Further, you can also convert your spending into EMIs extending up to two years. However, in such scenarios, you might end up paying a higher credit cost. 

On the other hand, instant loans are preferable for large expenses such as home renovation, where you would want to repay the debt over a longer time horizon.

Choosing between a credit card and an instant loan depends on your needs. If you want to quickly access funds for short-term needs, a credit card could be the right choice for you. However, if you need a larger amount and want to repay the debt over a longer period, an instant loan can be a better option.