The Indian credit market has been growing at a phenomenal rate during the past few years. The credit products, personal loan and credit card have both recorded 26% and 27% growth rates respectively in the Financial Year 2018 – 19.

Both these credit facilities share several features such as no end-usage restriction and no collateral which make them ideal to meet multiple expenses. Regardless, there are some inherent differences between an offline or online credit card and a personal loan, specifically designed to satisfy separate sets of financial obligations.

It is essential to learn these distinctions properly in order to decide which credit product suits what type of need.

For instance, credit cards come with a revolving line of credit, wherein your credit limit is renewed upon timely repayments. In the case of personal loans, no such facility is available.

In the case of credit cards, the quantum of credit is relatively lower compared to a personal loan. Personal loans are designed to meet high-end expenses, whereas credit cards are structured to meet smaller and recurring expenses.

Repayment tenor also varies between these credit products. In case of credit cards, the repayment tenor usually recurs periodically, whereas, in the case of personal loans, there is a single repayment tenor which usually extends up to a few years.

Credit cards also come with reward programmes when you use it to transact. Certain cards provide more rewards compared to others, for instance, RBL Bank Credit Card. In the case of personal loans, there is no facility of rewards.

You can also convert the unutilised amount of a card limit as a credit card loan to meet a big-ticket expense.

You need to carefully assess the features of both the products to decide which would be more suitable to your financial requirements.