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What is the difference between a loan and a credit card

Posted: Wed Feb 19, 2025 3:51 am
by monira444
A credit card and a consumer loan are the two most popular banking products. In this article, we will tell you how they are similar and how they differ from each other. We will also try to answer the question of what is better - a consumer loan or a credit card. Spoiler: it all depends on the specific situation.

Comparison of a loan and a credit card
We will compare a credit card with a classic non-targeted loan, which is issued without collateral. We do not consider mortgages and car loans here, as they do not meet these criteria.

To demonstrate the difference, we will first define the products, then compare them by key parameters - maximum amount, term, interest rate, features of using the limit and some others.

Definitions
A loan is a credit that a lender (bank) issues to a borrower list of mobile number database under certain conditions. These conditions are specified in advance in the contract. The borrower undertakes to repay the debt according to the schedule and to pay off the lender in full no later than the established deadline.

A credit card is a payment instrument linked to a bank account opened in the name of the borrower. This card differs from a debit card in that it contains not the client's personal money, but the bank's funds. The borrower has access to this limit, as well as the ability to deposit his own funds in excess of the limit. The procedure for returning funds is a little more complicated - we will talk about this in more detail in the following points.

Sum
On average, the maximum loan amount is greater than the card limit. For example, at Bank Sinara you can getup to 3 million ₽ in cash, within the framework of consumer lending, and the maximum amount forcredit card— 700,000 ₽.

Interest
You can use the card without paying any interest at all. To do this, you need to fully repay the debt before the end of the grace period, which lasts on average 50-55 days. In Bank Sinara, it reaches 56 days. If you go beyond the grace period, interest begins to accumulate - but not on the entire limit, but only on the amount spent. On average, they are higher than in the framework of regular consumer lending.