Personal loan or credit card EMI: Which truly costs less?

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A personal loan usually carries a lower annual interest rate than a credit card EMI. With a personal loan, you get a fixed rate, a clear tenure, and EMIs that don’t change, so the total interest is easier to control. Credit card EMIs can look convenient at checkout, but effective costs rise once you add processing fees, credit limit, and the risk of higher charges if you miss a due date.

For bigger expenses and longer repayment—say two to five years—a personal loan typically works out cheaper because the rate is lower and the plan is fixed. For a small purchase repaid quickly, a promotional card EMI can be fine if the offer is genuinely low-cost and you’re certain you’ll pay on time. The longer you take to repay on a card, the more likely it becomes the costlier option.

Compare total cost, not just the headline rate. Add processing fees, GST, insurance add-ons, and any foreclosure or prepayment penalty. Check the tenure’s impact: a shorter tenure means higher EMIs but less interest overall. If you pick a card EMI, remember it will tie up part of your credit limit, raise your utilisation ratio, and hurt your credit score if you slip on a payment—even once.

A card EMI can work for a small, planned spend that you can clear within a few months, especially if the issuer offers a true low-cost conversion. It helps when you’ve already paid with the card and want a quick way to spread the bill. It’s less suitable if the EMI will keep your limit blocked for long or tempt you to revolve other card spends at high interest.

Choose a personal loan for larger amounts, longer tenures, or when you want predictable EMIs and a clean separation from your day-to-day card spending. A personal loan keeps your credit card free for emergencies and avoids the spiral that can start if you mix big EMI conversions with regular card usage, fees, and occasional rollovers.

If the amount is large or the payback will take years, a personal loan usually costs less. If the amount is small and you can finish repaying fast under a genuine low-cost offer, a credit card EMI can be acceptable. Do the math on total cost—including fees and the impact on your credit limit—and choose the option that you can repay comfortably and on time.