Personal Loan vs Credit Card EMI: Which Is Better in Bangladesh?

Short answer: Neither is always better. Credit card EMI is quick and works well for a single planned purchase from a partner shop, especially when the bank’s processing fee is low or zero. But many “0% EMI” plans carry a processing fee and a card charge that, by our calculation, can cost 19% a year or more. A personal loan usually costs less for larger amounts and longer periods. Rates have been around 12% to 13% at some banks, with a small processing fee, and Bangladesh Bank now allows unsecured personal loans of up to Tk 10 lakh. Compare the total cost in taka, not the headline rate, and avoid carrying an unpaid card balance, which can cost up to 25% a year.

A laptop and two offers

Rumana, 29, a graphic designer in Dhaka, needs a Tk 1.5 lakh laptop for work. The shop offers “0% EMI for 12 months” on her credit card. Her bank’s app offers a personal loan at 13% for a year. “Zero percent sounds cheaper,” she says. “But is it?”

How does credit card EMI work?

With card EMI, a purchase made with your credit card is split into equal monthly instalments, usually 3 to 24 months, at shops and online stores that partner with your bank. The “0%” refers to interest, but a processing fee often applies. ShareTrip’s terms, for example, list bank processing fees of 4% to 6% for six months and 6% to 10% for 12 months, plus a 1.5% card charge on the total (ShareTrip). The full purchase amount is blocked from your card limit and released as you pay.

How does a personal loan work?

A personal loan pays a lump sum into your account, which you repay in fixed monthly instalments over one to five years. You can use it for anything. Standard Chartered’s personal loan, for example, runs from Tk 50,000 to Tk 20 lakh over 12 to 60 months, with a processing fee of 0.5% of the loan (capped at Tk 15,000) plus VAT, and its calculator uses an illustrative 12.5% rate, as we found in our Standard Chartered personal loan review. Bangladesh Bank has raised the ceiling for unsecured personal loans to Tk 10 lakh and secured ones to Tk 40 lakh, The Daily Star reported.

Which costs less? A worked example

By our calculation, for Rumana’s Tk 1.5 lakh laptop over 12 months:

Option	Monthly payment	Total extra cost	Approximate yearly cost
Card EMI, “0%”, 8% processing + 1.5% card charge	Tk 12,500	Tk 14,250	About 19%
Card EMI, “0%”, no processing fee	Tk 12,500	Card charge only, if any	Close to 0% to 3%
Personal loan at 13%, 0.5% fee + VAT	About Tk 13,400	About Tk 11,600 (interest Tk 10,800 + fee Tk 860)	About 14%
Unpaid card balance at 25%, repaid over 12 months	About Tk 14,260	About Tk 21,100	25%

Our calculations. Fees and rates vary by bank and shop; VAT may apply to fees. The personal loan assumes a reducing-balance loan.

The lesson: a genuinely fee-free EMI plan beats a personal loan, but a “0%” plan with a high processing fee can cost more than a loan. Revolving a card balance is the most expensive option. Bangladesh Bank raised the maximum credit card interest rate from 20% to 25% from January 2025, The Daily Ittefaq reported.

Side-by-side comparison

	Credit card EMI	Personal loan
Approval	Instant at checkout, if you have a card	Days; income and CIB checks
Amount	Limited by your card limit	Typically Tk 50,000 and above; unsecured up to Tk 10 lakh
Use	Purchases at partner shops	Any purpose, cash in your account
Tenure	Usually 3 to 24 months	Usually 1 to 5 years
Cost	0% interest, but processing fee and card charge often apply	Interest plus a small processing fee
Early settlement	Often a fee, e.g. 0.5% at some banks	Capped at 0.5% for bank term loans
Effect on credit	Uses up your card limit	Adds a new loan to your CIB record

When is card EMI better?

• The processing fee is zero or very low.
• The purchase is small to medium and fits within your card limit.
• You want it today and can repay in under a year.
• The EMI price is the same as the cash price.

When is a personal loan better?

• You need a larger amount or several purchases.
• You want to spread repayment over two years or more.
• The shop does not offer EMI, or charges a high fee for it.
• You want to keep your card limit free for emergencies.
• You can get a cash discount by paying in full.

Questions to ask before you choose

1. What is the total I will pay, in taka, including all fees and VAT?
2. Is the EMI price higher than the cash price?
3. What happens if I miss an instalment?
4. Can I settle early, and what does it cost?
5. Will the monthly payment still fit if my income falls?

To work out loan instalments yourself, see how to calculate your monthly loan instalment. For more on instalment plans, read what buy now, pay later is and how it works, and if you are still building credit, how to get your first credit card.

Back to Rumana

Rumana asked the shop for the bank’s processing fee in writing. It was 8%. She took the personal loan instead, paid the shop in cash and got a Tk 3,000 cash discount. “The ‘zero percent’ offer would have cost me more,” she says.

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This article is general information, not financial advice. Rates and fees vary by bank and change often.

Frequently asked questions

Is 0% EMI really interest-free in Bangladesh?

The interest may be zero, but banks often charge a processing fee and shops may add a card charge. Ask for the total cost.

What is the maximum personal loan without security?

Bangladesh Bank allows unsecured personal loans of up to Tk 10 lakh, and secured ones of up to Tk 40 lakh. Each bank sets its own limits within that.

What is the maximum credit card interest rate?

Bangladesh Bank set the cap at 25% from January 2025, up from 20%.

Does card EMI affect my credit record?

Yes. Card balances and missed instalments are reported to Bangladesh Bank’s credit bureau, like loans.

Can I pay off card EMI early?

Usually yes, but some banks charge an early settlement fee, such as 0.5%. Check your bank’s schedule of charges.

Key words explained

Term	What it means
EMI	Equated monthly instalment: a fixed monthly payment.
Processing fee	A one-off charge to set up an EMI plan or loan.
Reducing balance	Interest charged only on what you still owe.
Effective annual rate	The true yearly cost once fees are included.
Card limit	The maximum you can spend or owe on a credit card.
Revolving balance	An unpaid card balance carried to the next month, which attracts interest.

How we reported this

We used ShareTrip’s published EMI terms, The Daily Star’s report on Bangladesh Bank’s personal loan ceilings, The Daily Ittefaq’s report on the credit card interest cap, and our own Standard Chartered review and early repayment guide. All cost comparisons are our own calculations. The featured image is an illustration made by Dhaka Debates.

Editor’s note: Rumana is illustrative, created to show how a borrower might compare these options. She is not a real person. The figures come from the published sources listed with this article and our own calculations.