admin July 13, 2021

Your finances determine your quality of life in terms of money. If you are facing a financial crunch, you may require money to fulfill your basic needs.

When in need of money, you can borrow funds from the market either in personal loans or credit card loans. Both of these loans have their own pros and cons and may vary in suitability from person to person.

The critical point of consideration before borrowing a loan is to check the terms and conditions of the loan and how it can be beneficial for you.

The suitable loan

Experts recommend a loan against a credit card for short-term debt, whereas if the loan is required for a longer tenure, personal loans are the best option.

In Ireland, Loans against credit cards are also known as quick loans. With the emphasis on tenure, eventually, the point comes down to the loan's interest rate and repayment terms.

Therefore, your prerogative is to check the benefits and factors for both the loans, such as interest rate, tenure, and repayment terms, and then make an informed decision.

Personal Loan vs Loan against Credit Card

Personal loans in Ireland are usually offered for the tenure of 12-60 months with a fixed rate of interest. It has to be paid in monthly installments, i.e. equal monthly installments have to be paid, including the principal amount and the interest rate.

If you are salaried, there are more chances of your approval as compared to self-employed people.

On the contrary, a loan against the credit card is known as the revolving debt, and the loan amount is the amount spent on the card, and the balance remains at the end of the monthly billing cycle.

The working of Credit Cards

Your credit cards help you with big or small ticket purchases. It is convenient to borrow and is used for purchases in-store or online mode.

Along with this benefit, there is a drawback attached to the loan against a credit card. If you cannot pay the entire debt, it keeps on adding up in your billing cycle, and you have to pay the highly high-interest rate on the unpaid amount.

Over time, they will keep on accumulating and can get you stuck in a debt trap.

This situation mainly arises because the credit card companies do not have the system of paying the total amount, and you have the leverage to pay in part.

You have to pay the minimum amount that is mentioned in your credit card statement under the head MAD, i.e. Minimum Amount Due.

The most significant benefit of using credit cards is that you can keep using the card until you have exhausted the balance. With these techniques, the interest rate accumulates and gets piled up if not paid on time. Hence, they are known as resolving debt.

This is the main reason that you can start with this loan. The loan against the credit card is similar to the small personal loan.

Most of the loans against credit cards are unsecured. Most credit card loans are unsecured. Very few credit cards require any collateral in the form of security.

A secured credit card does not require any form of collateral.  But if you want a secure line of credit, you may have to deposit something in the form of security.

However, there are some advantages too for the loans against credit cards.

  1. No additional documentation is required for applying for a credit card.
  2. Most people fall in the eligibility category to apply for a loan against credit cards if they have a good credit rating.
  3. No physical visits are required while applying for this loan. You can initiate the process online, and once the approval is done, you will receive the amount.
  4. A loan against credit cards creates the ideal situation for debt consolidation. It offers the option to transfer the balance at 0% interest with repayment tenure from 12-21 months.

Disadvantages of loan against Credit Cards

There are very clear positives of this loan, but it also has some negatives that are mentioned below:

  1. Depending upon the APR, there can be very high-interest rates.
  2. There are specific fees attached to your credit cards, such as late fees, annual fees, and over-the-limit fees
  3. To apply for a credit card loan, your CIBIL score must be over 700. With this score, you are eligible for lower interest rates too.
  4. If you withdraw money in case of cash requirement, you have to pay additional interest as the interest starts from Day 1.

The usage of Credit Card Loans

To make an informed decision, you can check with the advantages as mentioned above and drawbacks. It depends on the end-user and his financial condition regarding repayment capacity, the amount required, and the requirement tenure.

The right time for a Personal Loan

The main advantage of a personal loan is that it gives you control over your repayment. You can also apply for provident loans that come under personal loans.

Usually, the eligibility criteria are not strict in comparison to the loan against the credit cards. There are many factors that the lender considers before the approval, such as qualifications, financial need, repayment capacity, and any other factors.

Personal loans are customized as per your needs and are offered easily.

The main difference between a personal loan and a credit card loan is the amount offered. In a personal loan, the lump sum amount is offered, whereas the amount is used to make purchases in the loan against the credit card.

Benefits of Personal Loan

Like the Credit card loan, there are some advantages of a Personal Loan too.

  1. Compared to the loan against the credit card, the eligibility criteria for personal loans are less strict. You get more leverage on personal loans in Ireland as opposed to credit card loans.
  2. Personal loans can help you in your debt consolidation and that too with a lower rate of interest.
  3. If you need a lump sum amount, personal loans are the ideal option for you. You may need a lump sum amount to make payments in cash. To solve this problem, you can always go for a personal loan.
  4. Both modes are available to apply for a personal loan. You can choose either and get your financial issues resolved.
  5. Few documents are required when applying for a personal loan. Once your documents and loan are approved, you may receive the amount within 30 minutes* of the approval.

Drawbacks of Personal Loans:

With the points mentioned above, a personal loan may be appealing to you, but it does have some drawbacks mentioned below for you to weigh them both equally.

  1. Compared to the interest rate for the credit card loan, personal loans usually offer an interest rate between 13%-36%, excluding the processing fees, which in totality makes it expensive than the credit card loan interest rate.
  2. If you opt for a personal loan, you are limited to a fixed payment schedule.
  3. To get a lower interest rate, you should have a high credit score and income.
  4. For a personal loan, you should all the documents that are required in the process.

Usage of Personal Loan

You can make use of your personal loan in the following situations.

  1. In case of longer repayment tenures
  2. Personal loans are the best option when you have to make multiple cash payments
  3. For your debt consolidation in tangible forms


From a vantage point o view, both personal loans and loans against credit cards have advantages and disadvantages and are suitable to different people in different situations. The major differentiating factors are interest rates, the amount, and the repayment tenure. It may be challenging to decide as it depends upon the situation of the borrower. It depends upon the financial situation, perspective, repayment capacity, and circumstances of the borrower.