Whether borrowing money, taking a personal loan, or using a credit card, EMI may significantly affect the total cost. The deciding factor is mainly determined by the amount of borrowing you require and the time of the borrowing.

A personal loan is usually the more affordable choice for a larger loan. It tends to attract lower interest rates, unlike credit card EMIs. Personal loans are also characterized by fixed interest rates, clearly spelled repayment periods, and tenures, and they are suitable for individuals who find it appropriate to have a structured repayment and predictability of their finances. Since personal loans are often unsecured depending on your credit history and income stability, but after approval, they are flexible in terms of usage.

In contrast, credit card EMIs are effective in small, monthly purchases, such as the purchase of electronics or the expenses to be covered in the short term, and which can be paid in a few months. But the cost of card EMIs is more likely to increase. Additionally, even a single default in addition to the EMI payments can have a negative effect on your credit score and result in penalties.

As such, a personal loan will be a good alternative if the financial requirement is significant and long-term, as it will save you money and make repayment more effective. Credit card EMI is easy to use and can help to avoid debt traps in short-term or low-value purchases. It is always prudent to compare interest rates, repayment flexibility, and tenure options and make a decision.

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