Credit Cards VS. Instant Cash Loans

  • Updated on: 3 Jan 2024
  • Published on: 20 Apr 2019
Credit Cards VS. Instant Cash Loans

You can get instant cash on a credit card or apply for a personal loan to help you manage your planned or unplanned financial requirements. Before choosing any option, consider the interest levied in both cases. With instant cash loan and online personal loan becoming increasingly popular, you can get funds from the convenience of your home.

That said, most of you may wonder which option is better: Credit cards or cash loans. While both have their benefits, knowing which option is better suited to your situation is essential. Read on to learn how cash loans and credit cards differ and how to choose the best option for you.

Features of Credit Cards vs Cash Loans

Here is a quick rundown of a few essential attributes of both forms of credit.

1. Limit of borrowing and rate of interest

The quantum of money you require often determines whether you should go for instant cash on a credit card or opt for a personal loan. If the quantum isn’t too much, it may be better to go for a credit card. Regular borrowing and paying off credit will assist in improving your credit score as well – a prerequisite for most bank loans. 

However, if you need a large amount of money, an instant cash loan is the obvious choice. They offer low-interest rates and are now more readily available without the hassle of rigorous paperwork and the strenuous wait period. 

Fibe, for instance, allows you to apply for a loan through its app and you can get approval within minutes once you meet the eligibility terms.

2. Time taken to repay the debt

Credit cards have a relatively high interest rate and while they are simple and easy for small expenditures, you must pay off the debt in time. A recurring rate of interest could almost double your debt if not paid off appropriately. 

Gauge the time you would require to pay off the debt – if the time frame is more than 3 months, a cash loan will save you money. Most instant loans allow you to pay back the money within a 6-to-12-month period by paying a nominal interest charge. 

On most instant loan apps, the repayment policy is flexible. It allows you to decide the payment schedule depending on your convenience.

3. Spending habits

Credit cards have lucrative entertainment deals associated with them. However, if you tend to overspend and have trouble resisting temptations, these deals could be your downfall. 

A little control could go a long way when it comes to using credit cards. Nevertheless, dismissing their benefits, such as accumulation of miles during flight travel, lounge access and cashback offers on most purchases, may be unfair. 

4. Credit score

This is an important criterion most lenders consider when sanctioning your loan or credit card approval. Any kind of traditional loan requires you to have a credit score and a higher credit score can reduce the interest levied on your sanctioned loan. Most instant loan apps let you apply for a loan even with a low credit score, especially for new borrowers.

These apps evaluate customers based on a combination of their credit score and social worth score. Your social worth score depends on your social media presence and whether you know/interact with people who have previously defaulted on their loans. 

While it is vital to maintain an optimal credit score, you can always boost your score by borrowing and subsequently paying off credit frequently. 

How to choose between Instant Cash Loans and Credit Card Loans?

Since an instant cash loan and a credit card offer credit, choosing a suitable option can be daunting. Ultimately, it depends on your personal preference and financial capabilities. 

Here are some important points that can help you choose a suitable financing option. 

1. Consider the urgency of your fund requirement

Getting the funds at the right time is essential to address urgent financial obligations. If you need a lump sum immediately, getting an instant personal loan is a smart borrowing decision. Do note that some credit cards also have a loan feature, which is just as quick. 

2. Evaluate the cost of borrowing

Another point to evaluate is the interest rate associated with the borrowing. Credit cards typically have higher interest rates than a loan. So, getting an instant personal loan is ideal if you want credit at a lower cost. 

3. Assess your repayment ability

Borrowing funds comes with the responsibility of repayment. Delayed or missed payments can lead to penalties and other consequences. So, planning the repayment before borrowing is essential. 

A credit card has a shorter repayment period. Usually, you need to repay the credit card bill at the end of the month. On the other hand, you can repay a personal loan in affordable EMIs. This is because you get the benefit of choosing the loan repayment period as per your affordability.

4. Check the associated fees and charges

Like every type of financial product and service, personal loans and credit cards also come with certain fees and charges. In case you get a credit card, you need to pay annual fees, cash advance fees, late payment fees and other fees. 

A personal loan also comes with charges like processing fees, late payment fees, foreclosure charges and other associated charges. To choose the best option, compare these fees and opt for the cheaper option. 

While choosing an option depends on how you handle your debts, credit cards have always been associated with higher interest payments. Hence, independent of age and occupation, most borrowers tend to prefer cash loans. 

Instant Loan Apps in India, such as Fibe, have made the application process easier and you can get the required funds if you have a steady monthly income. Over the past few months, the hassle-free and speedy procedure of applying for personal loans has secured a lot of happy and trusting users for Fibe

Download the Instant Loan App or visit our website and register to get a Personal Loan effortlessly.

FAQs on Credit Cards vs Instant Cash Loans

Is it better to take a loan or use a credit card?

Choosing between a personal loan or a credit card depends upon your financial needs and preferences. Generally, a personal loan from a lender like Fibe is better since it has lower costs, a longer tenure and is easy to avail. 

Why is a personal loan better than a credit card?

A personal loan is a preferred financing option since it allows you to get funds quickly and has lower interest rates. Also, you can choose a repayment duration according to your affordability. This way, you can comfortably repay your loan with pocket-friendly EMIs.


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