Personal Loan vs Credit Card EMI: Which Is Cheaper?
A cost breakdown of borrowing Rs 2 lakh on a personal loan versus converting a credit card spend into EMIs.
The short answer
For amounts above roughly Rs 1 lakh and tenures beyond 12 months, a personal loan is almost always cheaper than a credit card EMI conversion.
Comparing the real cost
Personal loans in India typically run from about 10.5% to 24% a year depending on your credit profile, with a processing fee of 1% to 2%. Credit card EMI conversions usually carry 13% to 18% a year plus a conversion fee and GST on both the fee and the interest.
When a card EMI still wins
No-cost EMI offers on consumer durables, short three to six month tenures, and small ticket sizes where a fresh loan enquiry would needlessly ding your credit report.
Key takeaways
- Compare the effective annual rate, not the flat monthly rate.
- Always add GST and processing or conversion fees to the comparison.
- Check the foreclosure charge before you commit.
Frequently asked questions
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Disclaimer: Interest rates shown are indicative and are manually verified. Actual rates are subject to lender approval and applicant profile. Please verify the latest rates with the lender before making any financial decision.