Personal loan or credit card EMI: which is cheaper?
For a big expense you can take a personal loan, convert the purchase to a credit card EMI, or carry the card balance. The cheapest choice depends on the rate, the fees and how long you take to repay — here is how to compare them, with a calculator.
Three ways to pay over time
- Personal loan — money in your bank account, repaid in fixed EMIs at an annual rate (listed on Innopay Money: 12% to 36% a year), usually with a processing fee.
- Card EMI — your card issuer converts a purchase or part of your limit into EMIs, at a rate and fee set by the issuer, and adds 18% GST to the interest each month. It uses up your card limit until repaid.
- Carrying a card balance — paying less than the full bill. Interest is then charged on the balance, usually at a monthly rate far above loan rates, and the interest-free period on new purchases stops. Your card statement shows the rate.
Compare the total cost
Personal loan: EMI ₹9,168, interest and fee ₹12,376
Card EMI: EMI ₹9,073 (plus GST on its interest); interest, GST and fee ₹11,655
The card EMI costs about ₹721 less.
Example figures — enter the rates and fees from your card issuer’s offer and the lender’s Key Fact Statement. Compares the same amount borrowed; enter each fee before GST (18% GST is added), and note that a loan fee is often deducted from the amount paid out. Card EMI interest also carries 18% GST; loan interest carries none. Reducing-balance EMIs. An illustration, not advice.
Beyond the price
- A card EMI usually needs only a request to your card issuer, if it offers conversion and your limit allows it; a personal loan needs an application, but does not tie up your card.
- For amounts above your card limit, or cash you need in your account, a personal loan is the usual route.
- Whichever you choose, missing a payment costs extra and shows on your credit report — see missed EMI.
How rate and fees combine into one number: APR explained.
Applications are made in the Innopay app: choose the amount you need there and see the offers available to you. The lender decides approval.
Apply in the Innopay appFrequently asked questions
Is a credit card EMI cheaper than a personal loan?
It depends on the rate and fees each offers for your amount and tenure, and card EMI interest also carries 18% GST. Compare the total cost of both using the calculator on this page.
Why is carrying a credit card balance expensive?
Interest on an unpaid card balance is usually charged at a monthly rate well above personal loan rates, and new purchases lose their interest-free period until the balance is cleared.