Traveling is a great way to see new cultures, relax, and make unforgettable memories. But, paying for your trip might need some help from a personal loan or a credit card. Both options have their own benefits, but which is better for your travel needs? Here’s a comparison to help you choose between a personal loan and a credit card for your next adventure.
A personal loan is a specific amount of money borrowed from a bank or non-banking financial company (NBFC) that you pay back in monthly installments (EMIs) over a set time. The interest rates on personal loans are usually lower than those on credit cards, and they stay the same once the loan is approved.
Interest Rate: Starting from 10.50%
Tenure: Up to 7 years (depends on lender to lender)
Repayment: Fixed EMIs.
A credit card allows you to spend up to a certain limit based on your income and credit score. It’s a type of revolving credit, so you can keep using it as long as you pay it off by the monthly due date. Some credit cards also offer travel benefits like discounts, cashback, and reward points.
Interest Rate: 24–42% annually if not paid in full each month.
Tenure: No fixed tenure, pay back at your convenience (but paying the minimum or more is necessary to avoid interest).
Repayment: Minimum due or full balance, with interest if balance isn’t cleared.
Personal Loan: Lower interest rates (starting from 10.50%) than credit cards, making it a more cost-effective option if you need a larger amount.
Credit Card: Higher interest rates (24–42%), so it’s best if you can pay off the balance quickly or enjoy an interest-free period.
Tip: If you plan to repay over several months, a personal loan is generally more affordable.
Personal Loan: You can borrow a larger amount, typically starting from ₹50,000 up to ₹40 lakhs, based on your eligibility.
Credit Card: Limited by your credit limit, which is often lower than a personal loan amount.
Tip: Choose a personal loan for big-budget international travel; for smaller trips, a credit card might be enough if your credit limit supports it.
Personal Loan: Comes with a fixed EMI schedule, which ensures that you’re making regular progress on paying off the debt.
Credit Card: Flexible repayment options, but you need to pay at least the minimum amount due each month. However, carrying forward a balance can attract high-interest charges.
Tip: Personal loans are better if you prefer a fixed monthly repayment plan. Credit cards are ideal if you need flexibility, but only if you can pay off quickly.
Personal Loan: It can be process in one day.
Credit Card: Instant access to credit if you already have a card, and new cards may have a quicker approval time than loans.
Tip: If you’re in a rush to travel, a credit card is faster, but a pre-approved personal loan could also be quick.
Personal Loan: Not at all benefits.
Credit Card: Many travel-oriented credit cards offer air miles, discounts on hotels, and lounge access. Cards with cashback or reward points on travel expenses can reduce costs significantly.
Personal Loan: Since you receive a lump sum, it’s easier to stick to a planned budget for your travel.
Credit Card: Credit cards can encourage overspending due to easy credit access and ongoing limits.
Tip: If you find it hard to stick to a budget, a personal loan might help you control spending better than a credit card.
Personal Loan: No direct travel perks, but certain loans from banks may come with partner discounts.
Credit Card: Offers reward points, travel miles, airport lounge access, and cashback on travel spends. Some cards also offer complimentary travel insurance and exclusive discounts.
Consider a personal loan if:
You’re planning a large trip that requires more funds than your credit card limit.
You want a fixed EMI repayment structure.
You need lower interest rates for a longer repayment period.
You are looking for quick disbursal of a larger amount.
Consider a credit card if:
You’re planning a short trip or domestic travel.
You can repay the balance within the interest-free period.
You already have a credit card with travel perks and rewards.
You need flexibility in spending and the option to pay as you go.
| Factor | Personal Loan | Factor |
|---|---|---|
| Interest Rate | Lower, around 10.50% | Higher, around 24–42% if balance isn’t cleared |
| Loan Amount/Limit | Higher loan amounts (₹50,000 to ₹40 lakhs) | Limited by your credit limit |
| Repayment | Fixed monthly EMIs | Flexible but requires minimum payments or full payment |
| Approval Time | One day | Instant approval |
| Travel Benefits | None | Air miles, cashback, rewards, hotel discounts on select cards |
| Best For | Large-budget, international travel | Short trips, flexible spending within credit limit |
Choosing between a personal loan and a credit card for travel depends on your trip budget, how you plan to repay, and whether you want fixed or flexible payments. A personal loan is best for large trips or international travel where lower interest rates and bigger amounts help. On the other hand, a credit card is great for shorter trips or if you can pay off the balance quickly, especially if it offers travel rewards.
Personal loans are usually cheaper due to lower interest rates. Credit cards can be costlier if you carry a balance, as their interest rates are significantly higher.
Yes, you can, but ensure it has low foreign transaction fees. Check with your bank about applicable charges and consider a credit card with travel perks for maximum benefits.
Missing an EMI can impact your CIBIL score and may attract late fees. Always plan your finances to ensure timely payments.
Personal loans may include processing fees and prepayment charges. Credit cards can have annual fees, foreign transaction fees, and high interest if you don’t clear your balance.
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