I believe the answer is: Personal loans offer lump sums of money, while credit cards set a maximum amount a person can borrow
In personal loan, the amount of loan and interest rate that the borrower have to pay would stay the same regardless if that borrower use the money or not.
In Credit card, the borrower only required to pay the amount that they use plus interest rate.
The credit card requires no collateral but in case of personal loan, banks asks for some collateral.
In personal loans, a huge amount is given on loan but credit card has a certain fixed limit.
Further Explanation:
Personal loan and a credit card:
The personal loan is taken for personal purposes, and the amount given for the loan is much greater than the credit card limit.
In personal loan, the interest rate and the principle amount paid is the same, whether the money is being used or not. But in the case of credit card, only the amount used by the cardholder has to be paid with the interest rate.
The major difference between the personal loan and the credit card is the collateral. In personal loans, the bank gives the loan on the basis of collateral but in the case of credit card, there is no requirement of the collateral. And collateral is asked by the bank which is a kind of security in case the loan is not repaid by the person who has taken the loan. His or her collateral will be seized by the bank.
Learn More:
1. Credit card
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2. Interest value
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3. Credit card
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Answer Details:
Grade: High school
Chapter: Loans
Subject: Business studies
Keywords:
Which describes the difference between a personal loan and a credit card, in personal loan, the amount is huge than the credit card, credit card has a certain limit. Credit card requires no collateral but in the personal loan, the bank asks for the collateral.
