Loan Against Credit Card
Are you in urgent need of money and thinking of taking a loan against your credit card? Here are some factors to keep in mind when considering that option.
Definition: A loan against credit card is a loan that is availed against your credit card limit. It can come in handy when you are in urgent need of funds and require cash immediately.
Eligibility: You need to be the holder of an active credit card in order to qualify for this loan. Only select customers are eligible for a loan against credit card, which could make it inconvenient if you are in urgent need of funds.
Loan amount: The loan amount depends entirely on the limit available on your credit card, and your issuer's lending policies. You can log in to your bank's Net Banking platform and check your eligibility for such loans.
Process: The card limit is blocked, which is subsequently released as you pay back the EMIs on time.
End Use: A credit card loan is exactly like a personal loan in the sense that you can use the loan amount for any purpose; there are no restrictions on how you can spend the money.
Interest rate and tenure: Interest rates are high and could sometimes be higher than a personal loan as well. You need to check with your bank on the interest rate on a loan against your credit card. The loan is paid back in easy EMIs, just as with a personal loan, but you will not be able to use your card fully until the entire amount along with interest is paid back to the bank.
Features of a Loan Against Credit Card
• Nil documentation
• Instant approvals and speedy disbursal – direct transfer to Savings Account
• No collateral required
• Applicant must be the holder of an active credit card of that bank
• Multiple tenor options available to suit your budget
• Get a loan just with a few clicks
• Convenient and hassle-free
When should I apply for a loan against credit card?
If you need emergency cash to tide over small expenses and don't mind your credit limit being blocked temporarily, then a credit card loan might be a good choice. There is a disadvantage to taking a loan against credit card – only certain select customers, who fulfill the lender's specific criteria, are eligible for a loan against credit card. This could make it inconvenient if you are in urgent need of funds. Also you might need to pay a high interest rate, depending on your credit history and your lender's policies.
You can log in to your bank's Net Banking platform and check your eligibility for such loans. You can also call the customer care department of your bank and enquire about the eligibility criterion and the loan amount. Depending on your eligibility and the interest rate, you could opt for a loan against your credit card.