# Personal Loan vs Credit Card Loan vs Card EMI: Which Is Cheapest?

> Need INR 2 lakh fast? Compare a personal loan, a pre-approved loan on your credit card, card EMI and just paying the minimum due, with simple numbers for each.
- **Published**: 2026-11-05
- **Modified**: 2026-11-05
- **Category**: loans
- **URL**: https://www.tldr.money/articles/loans/personal-loan-vs-credit-card-loan

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New to loans? Start with the [loans guide](/loans). This page answers one question: **you need to borrow a few lakh, so which is the cheapest way?**

## The short answer

From cheapest to costliest, usually:

1. **Personal loan** from a bank
2. **Loan on credit card** (pre-approved, paid to your bank account)
3. **Card EMI** on a purchase
4. **Paying only the minimum due** on your card
5. **Cash advance** from an ATM using your card

The gap between the first and the fourth is huge.

## The numbers: borrowing INR 2 lakh for 2 years

| Option | Example rate (a year) | EMI | Total interest |
|---|---|---|---|
| **Personal loan, good credit** | 12% | INR 9,415 | **about INR 26,000** |
| **Loan on credit card** | 16% | INR 9,793 | about INR 35,000 |
| **Personal loan, weaker credit** | 24% | INR 10,574 | about INR 54,000 |
| **Revolving on a card** (~3.75% a month) | about 45% | INR 12,784 | **about INR 1.07 lakh** |

**What this means:** carrying the same INR 2 lakh on your card costs about **4 times** the interest of a good personal loan. And card interest also attracts **18% GST**, which is not in these numbers.

*How we worked this out: standard reducing-balance EMI formula. Rates are examples; your offer depends on your lender and credit score. Processing fees are not included.*

Try your own numbers in the [personal loan EMI calculator](/tools/personal-loan-calculator).

## Each option in plain English

### 1. Personal loan

You borrow a fixed amount from a bank or NBFC and repay it in fixed EMIs, usually over 1 to 5 years.

- **Good:** usually the lowest rate if your [credit score](/articles/loans/credit-score-for-loan) is good. Money in your account, use it for anything.
- **Watch out:** processing fee of 1% to 3% is common. Most personal loans are **fixed-rate**, so prepayment charges can apply. RBI's no-penalty rule is for floating-rate loans.

### 2. Loan on credit card

Your card issuer offers you a pre-approved loan. The money goes to your bank account, and EMIs show up on your card bill.

- **Good:** instant, no paperwork, sometimes no processing fee.
- **Watch out:** it **blocks part of your card limit**. That raises your [credit utilisation](/glossary/credit-utilization), which can lower your score. Check the rate, because some card loans are not cheap.

### 3. Card EMI on a purchase

You convert a big purchase on your card into EMIs.

- **Good:** easy at checkout. Some brands pay the interest for you ("no-cost EMI").
- **Watch out:** "no-cost" EMI often has a processing fee and GST on the interest. It may also cancel a cash discount you would have got by paying in full.

### 4. Paying only the minimum due

You pay just the small minimum amount on your card bill and carry the rest.

- **Watch out:** this is the **most expensive common mistake**. Interest runs at about 3.5% to 3.75% a month, plus GST, and you lose the interest-free period on new purchases until you clear the full balance. Read [credit card fees and the minimum-due trap](/articles/credit-cards/credit-card-fees-and-minimum-due-trap).

### 5. Cash advance (ATM withdrawal on a card)

- **Watch out:** a fee of around 2.5% upfront, plus interest **from the same day**. Use it only in a true emergency.

## Already carrying card debt? Do this

If you have a big card balance, a cheaper loan can save you money:

1. **Get a personal loan or a card loan** at a much lower rate.
2. **Use it to pay off the card in full** on the same day.
3. **Stop using the card** for new spends until the loan is under control, or pay those in full each month.
4. **Never let the card balance build up again**, or you will have two debts.

## How to pick the right option

| If you... | Go for |
|---|---|
| Have a good score and need INR 1 lakh+ for 1 to 5 years | Personal loan from a bank |
| Need money today, and the card loan has a low rate and no fee | Loan on credit card |
| Are buying one big item and the brand covers interest | Card EMI (check fees and lost discounts) |
| Are carrying a card balance | Swap it for a cheaper loan, fast |

**Always compare the APR.** It includes fees and shows the true yearly cost. Lenders must show it in the [Key Fact Statement](/articles/loans/home-loan-borrower-rights-rbi) before you sign.

## Before you borrow

- **Check your credit score** first. A better score means a lower rate. See [how to check your CIBIL score for free](/articles/loans/check-cibil-score-free).
- **Apply to one or two lenders, not ten.** Each application adds a hard enquiry to your report.
- **Keep the EMI within budget.** A simple rule: all your EMIs together should stay under about 40% of your take-home pay. Check your take-home with the [in-hand salary calculator](/tools/in-hand-salary-calculator).

## Read next

- [How to improve your credit score](/articles/loans/improve-credit-score)
- [Credit card fees and the minimum-due trap](/articles/credit-cards/credit-card-fees-and-minimum-due-trap)
- [Best credit cards for beginners](/articles/credit-cards/best-credit-cards-for-beginners)
- [Personal loan EMI calculator](/tools/personal-loan-calculator)

## Sources

- RBI, Master Direction on Credit Card and Debit Card: Issuance and Conduct, 2022 (minimum due, interest and billing rules)
- RBI, Pre-payment Charges on Loans Directions, 2025: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12878
- RBI, Key Facts Statement for Loans & Advances, circular dated 15 Apr 2024
- EMI and interest figures: tldr.money calculation using the standard reducing-balance EMI formula; rates are illustrative
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