The credit market of India has been growing at a reasonable rate and has reached a growth of 21% in the third quarter of 2018. The market includes various financial products but primarily consists of credit cards and loans. Though both these are credits and lend you money in times of need, they have a thin line of difference.
With the advancements in technology, lenders also have developed a credit card app and loan app that enables easy application and approval. But before you avail such credits via these apps, you should know the differences between them.
What is a Credit Card?
A credit card is a plastic card like a debit card but differs in usage. You use a credit card to make payments for any purchase first and pay back the amount to the lender within a given period. You get to enjoy a specific period of days for repayment. This includes a billing period of 30 days from the bill generation date and an additional grace period of 15 days, which varies between lenders.
Repaying within this period will help you avoid accruing interest on your credit card dues. You can make use of a credit card app to track your payment due date and other necessary information.
What is a Loan?
It is a sum of funds that you borrow from financial institutions and NBFCs. The loan amount is substantial and so has a prolonged tenor for repayment. You can also avail a loan by mortgaging your property, and the amount can be used for several purposes. Similar to the credit card, you also get to enjoy a personal loan app to track your credit or apply for a loan and gather the required information.
Credit Card vs Online Loans
- When you avail a loan, lenders provide you with a number of funds as credit depending on your repayment capability, income, occupation, age, and CIBIL score. You can also avail a secured loan such as a loan against property where the loan amount will depend on the market value of the mortgaged asset. You also get access to online loan app through which you can make your application.
Your credit card bill amount will depend on the expenses you make using the card. However, you will be provided with a usage limit beyond which you cannot make any transactions.
- The loan tenor is usually prolonged, and you make your payment for a period calculated in years.
For a credit card, you get to enjoy a billing period as well as a grace period calculated as a number of days within which you are required to make your payment. You are only allowed to borrow the amount for a month which needs to be repaid in the upcoming month. You can use a credit card app to manage your outstanding amounts, payments, billing dates, statements, EMI conversions, etc.
- The interest rate at which loans are offered is much lower than the interest rate of credit cards.
- You can earn cash back and reward points for specific transactions that you can redeem at particular places to enjoy discounts. You can use the credit card app to check your earned reward points and cashback.
No such facilities of reward points are available in case of a loan.
- You can meet huge expenses such as education costs, wedding cost, purchase of a commercial or residential place, etc. with a loan amount.
You can use a credit card to make comparatively smaller expenses or transactions on credit.
Several financial institutions provide credit card and loans at an attractive interest rate. Bajaj Finserv is one such NBFC that provide these financial products against minimal documentation with the Bajaj Finserv Experia App, to make it more convenient for users. They also offer a range of loans, online account access, minimal charges, quick loan app, instant approval, substantial loan amount and other lucrative benefits.
Bajaj Finserv has also brought in pre-approved offers to make the application process fast and hassle-free. These offers are available on a variety of financial products including credit cards, home loans, personal loans, business loans, etc. Check your pre-approved offer by sharing minimal details like your name and phone number.
In addition to the above, there are other differences between a loan and credit card such and end-usage restrictions, eligibility criteria, documentation process, etc. However, before you avail such advances, make sure to consider the above-mentioned points to choose the most suitable financial product for your requirements.