Loan or credit card: which is more profitable?

A loan and a credit card are financial banking products with a similar purpose. It gives the customer the necessary funds, and the bank earns the interest rate. Quickly answering the question “which is better – a loan or a credit card?” is difficult. Both products have both advantages and disadvantages. To make a choice, you need to understand their features and conditions of registration.

The basic principles of credit

It makes sense to compare a credit card with a cash consumer loan. It is they are similar in terms of the conditions of obtaining funds and non-purpose use.

The basic principles of credit are:

  • There are clear deadlines in which to make regular payments, as well as a deadline for repayment of the entire debt;
  • The obligation to repay the loan. Breach of obligations threatens financial penalties, and in the extreme case – litigation with bailiffs;
  • you have to pay for the bank’s services. In the case of a loan, it is the interest rate. There may be additional costs. For example, voluntary insurance. Refusal of insurance often leads to a worsening of conditions – a higher interest rate or a lower limit.

The basic principles of a credit card

Credit cards have similar principles, but with minor adjustments:

  • there is a deadline for repayment, but there is also an option to renew the limit after repayment, and therefore extend the term. Consumer credit cannot boast of this;
  • money, of course, necessarily need to pay back. But payment schedules are more flexible;
  • credit cards have a big advantage. They have a feature such as a grace period. This means that in a certain period, designated by the bank, you don’t have to pay an interest rate. However, you should not forget that you have to pay extra for using your credit card. For example, for paid information services and annual maintenance.

What is easier to get – a loan or a credit card?

the basic requirements for clients for the registration of products are the same:

  • the age of majority;
  • citizenship of your country;
  • ability to pay;
  • registration and residence in the region where the bank is located;
  • availability of contact phone number.

Other requirements are stricter for cash loans. As a rule, the minimum age limit, a little higher – from 21 years. This requires compulsory employment and continuous work experience at the last place of work – at least three months.

The package of documents is smaller in the case of a credit card. Often you only need to show your passport. For the second product you will probably need a pay slip in addition. Or a second document to the passport to confirm identity and indirect proof of ability to pay. This can be:

  • service credentials;
  • foreign passport;
  • driver’s license, etc.

Advantages and disadvantages of a credit card

Before taking out a loan or a credit card, it’s best to weigh the pros and cons.

Advantages of a credit card:

  • The limit is renewed after the debt is paid off in full;
  • Additional bonuses in the form of cashback or promotions from bank partners;
  • interest is accrued not on the whole limit but only on the part of it, i.e. the part that was spent;
  • security – in case of theft or loss you can immediately block the account;
  • easy registration – fast and without a lot of documents;
  • the ability to take advantage of the grace period.

But there is another side to the coin:

  • high interest rates;
  • additional costs – annual maintenance fee, sometimes the cost of issuing a credit card (depending on the policy of the financial institution);
  • cash withdrawal fees. Moreover, grace period does not apply to cashing out;
  • small financial limit;
  • complicated scheme of grace period calculation.

Advantages and disadvantages of the loan


  • no additional costs in the form of annual maintenance fees and other commissions;
  • low interest rate;
  • high financial limit;
  • no additional fees for receiving cash.


  • Higher requirements for the customer than in the case of a credit card;
  • Interest rate charged on the entire amount of the debt. Even if the money is spent only partially;
  • The contract is not automatically renewed after the full amount has been repaid.

When choosing – credit or credit card – you need to consider not only the theoretical pros and cons, but also the conditions of specific options.