The facility of availing a loan is one of the many advantages that come with owning a credit card. The feature is offered by credit card issuing banks against specific credit cards, whereby you can avail a loan against your available credit card limit. It serves as an instant funding option and can be used to address your financial needs when you are in urgent need of money.
While the loan scheme can vary from one bank to another, there are some common features of credit card loan-
No extra documentation is required to apply for a credit card loan
Loan to address an emergency can be availed instantly against the unutilised credit limit on your card
In some cases, banks can even offer a loan against your credit card which is higher than the card’s credit limit
The loan on the credit card can be easily repaid in EMIs
There is a significantly long interest-free period on the loan, sometimes up to 90 days, which makes it affordable to repay the borrowed sum
If your card supports balance transfer, you can avail a credit card loan to clear the outstanding balance of another card and repay it in EMIs
A credit card loan is offered to select cardholders only. To be eligible for the cc loan facility, you would need to have a stellar credit history, good credit score, and a dependable spending and repayment pattern. If you are regular with your credit card bill payment and do not carry over dues, the chances of you securing a loan on your credit card will be higher.
There are several advantages of getting a loan on your credit card. These include-
A credit card loan can be easily applied for online
The approval is quick and hassle-free as there is no paperwork involved
There is an interest-free period that comes with your loan
No collateral is required against the cc loan as it a part of the credit card limit
The processing fee charged is only a very small percentage of the loan amount
As the name suggests, a personal loan is availed on a credit card to cater to personal needs. There are several factors considered by the bank when approving your request for a personal credit card loan. These include your usual spends, repayment pattern, credit history, etc. These factors also determine the total amount you can get as a loan on your credit card. As credit card loans are unsecured loans, they are usually offered for a tenure of five years. However, there exists the advantage of instant approval as well as quick disbursal which can be very useful in case of emergencies.
You can apply for a credit card loan by visiting the bank’s official website and filling in the credit card loan application. You would need to select a tenure which would be based on your repayment capacity. Once the online credit card loan application has been approved by the bank, your account would reflect the new credit limit. The bank would also notify you about the interest on the credit card loan and other related charges. You can then pay the credit card loan in installments every month.
Yes, many banks offer instant loans on credit cards, which immediately transfers the funds to your bank account. The total amount transferred as loan against your credit card can be above or within your credit limit.
Yes, interest will be charged on your credit card loan.
The loan on credit card can only be availed if you are eligible. For this, you need to have a stellar credit history and a dependable repayment pattern.
Yes, a cc loan is different from cash withdrawal. The cash withdrawal limit on credit cards is lower than the amount that can be borrowed as a loan. Also, the interest rate on cc loan is lower than that in the case of cash withdrawal.
The disadvantage of getting a credit card loan is that the interest on cc loans is quite high, which can attract significant penalties and drain your savings if not paid in time.