Essentially, a credit card is a financial tool that gives you the freedom to borrow money from your bank to cover your necessary bills now and pay it back later. You can use the credit line provided by a credit card to make necessary payments. However, this sum must be returned to the bank within the deadline set by the institution and the cardholder.
A loan against a credit card is essentially a personal loan that you can apply for using the credit card’s available limit. Unlike a personal loan, a credit card loan does not require any verification.
What is a credit card loan?
A loan against credit card is essentially a funding choice that is immediately accessible to cardholders. The financial instrument’s available credit limit is used as collateral for the loan. What more do you need to know about a credit card loan?
You can immediately apply for a loan against the remaining credit on your credit card.
Credit card loans feature an interest-free duration of up to 90 days, making them very inexpensive for all cardholders.
The loan against the credit card can be easily repaid by the borrower in instalments.
What Advantages Do Credit Card Loans Offer?
The benefits of taking out a loan against a credit card are numerous and include:
These loans are disbursed rapidly because there is no documentation process involved.
It is simpler for you to use the borrowed funds because the cash you would receive as a loan against a credit card can be deposited right to your bank account.
Credit card loans are subject to low interest rates, making them a financially sound option.
Upon submitting a request, you will immediately receive the loan amount.
Applying for loans with a credit card can be done online or over the phone in a few easy steps.
This form of financing is accessible from any location at any time.
Such loans have a low processing cost.
The loan amount can be repaid in convenient monthly instalments that will be charged to your credit card each month.
These loans are typically approved for a 24-month period of time (2 years)
Who should apply for a credit card loan?
First off, you can apply for a loan against a credit card if you have a credit card and need money to cover any urgent or unplanned bills. Before you submit an application for a loan against your credit card, you must first complete the following eligibility requirements:
- You should already be a customer of the bank that issues your credit card (only a few banks offer loans against credit cards to new customers)
- A credit card must be mandatory for the borrower.
- The borrower must have a high credit score and a solid track record of repaying debt.
You should carefully evaluate your credit history before applying for a loan secured by a credit card using internet banking, mobile banking, or by going to your nearby bank branch.
It’s also important to keep in mind that your bank may block your credit card from being used until your loan account is paid off and the remaining loan balance is less than your credit card withdrawal limit if you borrow a loan for an amount greater than your credit card withdrawal limit against the available limit on your credit card.
How Do I Apply for a Credit Card Loan?
If you want to apply for a loan against your credit card, you must do the following:
- If you want to apply for a loan against your credit card, go to the official website of your credit card provider or that of any other bank.
- Complete the form and send it in with the necessary documentation.
- The bank will review your application after receiving your documents and will verify them.
- The bank will deposit the loan amount into your account or issue a demand draught for the loan amount after satisfactory verification.
If you want to apply for a loan against a credit card using the offline process, you must go to the bank branch where you want to borrow the money and hand over the application and necessary paperwork to the appropriate official.
Also Read: Loan Against Credit Card Limit
A loan against a credit card is essentially a personal loan with extra advantages. Users frequently mix up taking cash out with a credit card with taking out a loan against a credit card. You must comprehend that credit card offer loans secured by credit cards using the available credit card’s available limit in order to properly appreciate this. On the other hand, when you make a cash withdrawal using a credit card, you are not taking out a loan from a bank; rather, you are withdrawing funds up to the credit card’s current limit.
A loan against credit card would be the best option for you if you need an immediate supply of cash to handle urgent difficulties. When the cash withdrawal limit on your present credit card is smaller than your current financial needs, you can choose this form of loan. Additionally, as you would have read above, compared to other types of loans, credit card loan perks are numerous.
