Insta Loan vs. Credit Cards: Which One Should You Choose

Some times, life throws unexpected expenses your way and you need quick access to funds. In such moments, two popular options often stand out - instant loans and credit cards. Both are designed to provide financial support when you need it most, but they come with their own set of features, costs and benefits.

The challenge lies in understanding which one suits your needs better. To make an informed choice, let’s take a closer look at how these two options compare.

Loan amount
Credit cards come with a fixed credit limit, which is the maximum amount you can borrow. This limit depends on your income and credit history. For example, if you earn ₹25,000 monthly, your credit limit may be ₹30,000 to ₹65,000. This may be enough for smaller expenses and not larger financial needs.

Instant personal loans online allow you to borrow much larger amounts. Depending on your income and credit score, you can get a loan of up to ₹12-15 lakhs. These loans are better for big expenses like medical emergencies, home repairs or consolidating debts.

Expenses
Credit cards are useful for shopping, dining and other transactions where card payments are accepted. However, they may not work for expenses that require cash, like paying rent or certain bills. You can withdraw cash from a credit card, but this comes with extra charges and high interest.

Insta personal loans give you money directly into your bank account. You can use this money for anything - whether it’s paying cash for rent, covering hospital bills or making purchases. This flexibility makes instant loans a better choice for a wide range of expenses.

Kind of debt
Credit cards are revolving debt. This means you can borrow again and again up to your credit limit as long as you repay the amount. If you don’t pay the full balance by the due date, interest is charged on the remaining amount. Since the amount you owe can keep changing, it can sometimes feel harder to manage.

Insta personal loans are instalment debt. You borrow a fixed amount and pay it back in equal monthly instalments (EMIs) over a set period. The repayment terms, including the interest rate and EMI amount, are decided upfront. So, you know exactly how much to pay each month. This makes it easier to plan.

Repayment method
With credit cards, you need to pay at least the minimum due amount each month. You can also pay the full amount if you want to avoid interest. If you carry forward any unpaid balance, interest rates are very high. Missing payments can also lead to penalties and hurt your credit score.

Insta personal loans have fixed EMIs and the amount is automatically deducted from your bank account every month. This setup ensures you don’t miss payments. Since the EMI is fixed, it’s easier to manage your monthly budget.

Tenure
Credit cards give you an interest-free grace period of 30 to 45 days to pay back the money you use. If you don’t pay in full within this period, high interest rates (around 24% to 48% annually) start applying. This makes them suitable for short-term financing.

Insta personal loans offer much longer repayment periods, ranging from a few months to up to 5 years or more. This means you can spread out your repayment over a longer time. It makes the monthly payments smaller. These loans are great for big expenses that need more time to repay.

Summing up
Deciding between an insta loan and a credit card depends on how much money you need, what you’ll use it for and how quickly you can pay it back. Both have their benefits, but the best choice depends on your needs and how comfortable you are with repaying. Understanding the details about amounts, costs and repayment can help you decide what works best for you.