Personal Loan or Credit Card? Which is Better for Travel Expenses?

So, after a few hectic weeks at work, you’ve finally reached a point where a vacation seems absolutely essential. But before the thought of taking a vacation can calm you down or get you excited, you realise that you will have to account for your travel expenses.

 

And so, you fervently scour the internet for tips, take out your calculator to crunch some numbers, and do some deep thinking, only to get stuck between two financing options. A Personal Loan or Credit Card - which one should you choose?

 

If you’re torn between these two options for financing your travel expenses, then you’ve come to the right place. We’re going to take up each financing option one after the other to determine which one would fit your needs better.

 

Let’s start with Personal Loans.

Many people tend to prefer Personal Loans for funding their travel plans, particularly if it’s a big ticket vacation. A Personal Loan easily doubles as a travel loan because it doesn’t come with any end use conditions attached. So, you can essentially use a Personal Loan for any personal purpose, and that includes financing your travels and vacations. Why do people choose this route? Here are some reasons.

• Quick and Easy Process

Gone are the days when you had to fill out tons of forms, submit several documents, put up collateral, and wait for several days to get a loan approved. Instant Personal Loans have now become the norm. And the best thing about this is that the entire process is now online.

 

Check: Personal Loan Documents Required

 

You just need to fill out an online application, attach a couple of scanned documents, and that’s it. If you’re eligible, your Personal Loan will likely get approved and the money will be disbursed to you within just a day or two, without the need for a collateral.

• Comparatively Low Interest Rates

The interest rates for a personal loan starts from around 10.5%  and can go way up to 25%. This is much lower compared to the interest rates on Credit Cards, which can go up to 30% or even 40%.

 

And here’s something that you should know. The interest rate on instant personal loan is generally dependent on your credit score. So, if you have a good credit score, you’re likely to get a lower interest rate, which would effectively translate to lower Personal Loan EMIs. Now, isn’t this a great motivating factor for maintaining a good credit score?

 

Another option to meet your travel expenses is to use a Credit Card. A Credit Card essentially allows you to make a purchase now, and pay later. Let’s look into the details.

Credit Cards offer an extremely easy and convenient way to pay for things even when you’re low on cash. Also, Credit Cards have now become more accessible, with many banks and financial institutions offering this product. Over the past few years, people have also gone from being wary of Credit Cards to embracing them wholeheartedly. And here are some reasons to choose a Credit Card for your travel expenses.

• Interest-free Period:

One of the primary reasons has to do with the fact that Credit Cards allow you to spend now and pay later - often at 0% interest for a specific period of time. Confused? Here’s how it works.

 

Let’s say that April 13th is the start of a new month (according to the terms of your Credit Card). Now, if you use your Credit Card for a purchase on April 13th, you’re typically given some time - say till about June 2nd - to clear off your dues without having to pay any interest. This gives you an interest-free period of around 50 days! So, you can effectively take your vacation now, and pay later.

• Easy Credit Limit Enhancement:

If you have a pre-existing relationship with your banker, you can leverage it to enhance the credit limit on your card. This will give you enough room to make bigger expenses during your vacation. And the best part about this is that you can place a request for credit limit enhancement online, and if you’re eligible, get it approved within just a few days.

 

Now, which one among these options should you choose? The answer lies with you, of course. If you’re certain you’ll have no trouble paying back all of your dues well within the Credit Card payment due date, then a Credit Card may just be the right option for you. If not, then it may be better to stay away from Credit Cards, since the interest charged on the pending dues can be exorbitant. But if you’re confident that you’ll be a responsible Credit Card user, Bajaj Markets offers you a variety of cards to choose from. We’ve partnered with many of the top banks in the country, and you can simply head to the Bajaj Markets site, compare your options and apply for the Credit Card that’s right for you.

Alternatively, if you’re okay with paying interest to the bank on account of a travel loan, and if you can effectively manage the Personal Loan EMIs without having them disrupt your finances, then going for an instant Personal Loan makes more sense. In case this is the option you choose, Bajaj Markets gives you a variety of Personal Loan offers to choose from. With interest rates starting as low as 12% per annum and loan amounts going up to Rs. 25 Lakhs, you can avail Personal Loans that fit your travel needs easily on Bajaj Markets. Also, check out a personal loan calculator to calculate your monthly EMIs.