Personal Loans and Credit Card both are types of credit provided by the bank and other financial institutions. The difference is that the former is offered in a lump sum with a relatively low-interest rate and the latter is a type of revolving credit where the borrower can access funds as long as it is being used within defined limits and compliance.
The personal loan repayment is done in monthly installments (EMIs) having a tenure between 1-5 years. These EMIs can are generally auto-debited from your account that has been connected with the loan account. For this, the bank takes a signed approval from you at the time of your application. For a credit card payment, you can either pay the total due in one shot or can get it converted into installments (max. up to 12 months). The payment can be done through cash or cheque deposit at branch or ATM, net banking or mobile banking, and mobile wallets. The same modes can also be used for personal loan payments in case you do not have sufficient balance in your bank account linked with your loan account or upon any default/delay in EMI payment.
Yes, you can pay the personal loan EMIs through your credit card as well. If you have a credit card with low-interest rates, in comparison to your personal loan, in an extraordinary situation few banks may allow you to pay the EMI using your credit card. However, this is conditional and completely at the discretion of the lending bank.
What Should You Consider Before Deciding The Mode of Payment for Personal Loan EMIs:
- Evaluating if it is actually lowering down the cost and not adding to your future cost. In case of payment through credit card, the interest rate on a credit card is usually on a higher side, hence this may multiply your costs in the future.
- Choosing a standing instruction to your bank for an auto-debit on the due date of installment can be the most convenient way. This helps you to avoid missing out on your EMI payments. However, in that case, you need to make sure sufficient fund is available in your linked bank account before the due date for EMI.
- Opting for online and offline modes of payment can be both convenient and inconvenient. This reduces the chance of bouncing in case of insufficient funds in the linked account and you can make the payment by any mode as per your available choices at the time. However, just in case you miss the date this may affect the compliances and your credit score.
In nutshell, banks and financial institutions approve of many ways you can pay the EMIs and re-pay your personal loan or/and credit card debt. You have to be aware of what is best for you and make an informed choice.
Published By: UAE Cash Loans Team
Published On: 3rd June 2020