Credit Card vs Loan: Which Debt Costs You More?

Carrying both credit card dues and a personal loan? Experts say always attack the credit card first — its 36–48% interest rate can double your debt faster than you realise, while a personal loan sits at a comparatively manageable 12–20%.

Here's what happened: Credit cards in India charge 36–48% annual interest, roughly 2–3x higher than personal loan rates of 12–20%, making them the costlier debt to carry.. Paying only the minimum on a credit card means interest is levied on the full outstanding balance each month, causing dues to balloon far faster than borrowers expect.. Financial experts recommend the debt avalanche method: clear the highest-interest debt first (credit card) while making minimum payments on the personal loan to protect your credit score..

What you should do: Calculate exact interest outgo: multiply your credit card outstanding by 3.5% per month and your personal loan by your EMI schedule — the gap will tell you which to prioritise immediately.. Set up auto-debit for your personal loan EMI and at least the minimum credit card payment so no missed payment damages your CIBIL score while you focus extra cash on repayment.. Once your credit card is fully cleared, redirect that freed monthly amount directly into prepaying the personal loan principal to reduce total interest and loan tenure..

Call your credit card issuer and request a balance conversion to a personal loan (EMI on outstanding) — many banks offer this at 15–18%, instantly halving your interest burden.