What is a Loan on Credit Card? - The uses of credit cards are many. Starting from cashless transactions to reward points and special deals, you can use credit card anywhere across the globe. Also, cardholders can avail pre-approved loans on credit cards within or over their credit limit. Similar to the usual loan schemes, the issuer essentially loans you the amount which you will be able to repay at a later date while being charged a definite interest rate.
Different banks offer comprehensive loan scheme when it comes to loan on credit cards. Listed below are some of the features of loan on credit card.
Most credit card loans are unsecured and do not require any collateral for the loan. Hence, the loan is offered to select cardholders only. Issuers have a stringent eligibility criteria when it comes to granting a loan on credit card. The cardholder should have a commendable credit history and a good purchase and repayment pattern to be able to apply for a loan on credit card.Quantum of Loan
The quantum of loan on credit card usually depends on the credit limit. Some issuers also offer loan over and above the credit limit where the availed loan amount will not be blocked against the credit limit. Also, starting from a minimum purchase amount of Rs. 2000, you will be able to convert your purchases to loan and pay it as EMIs.
IDBI Bank offers general credit card loan under the MSME portfolio for all individuals engaged in non-farm entrepreneurial activity. Assets acquired out of bank loan will be deemed as security. A minimum of Rs. 50,000 to a maximum of Rs.500000 can be availed as loan to meet the credit requirements of entrepreneurs.
Standard Chartered offers up to Rs. 500,000 as loan on credit cards. With interest rates starting at 1.17% per month and flexible tenures ranging up to 60 months, Standard Chartered loans on credit card is one of the most sought after financial product.
With the Loan on Phone scheme offered by HSBC, customers will be able to convert the expensive payments to easy instalments with low interest rates. Any purchase amount starting from Rs.2000 can be converted to EMI through just a call.
You can avail instant cash at low interest rates and zero documentation with Kotak Mahindra’s personal loan on credit cards. This loan on credit card is easy to apply, hassle free and is also disbursed quickly.
“Cash-in select” scheme is offered to select ICICI customers based on their performance on ICICI credit cards. Customers can avail loans up to Rs.5 lakhs with multiple tenures ranging up to 36 months.
IndusInd credit cardholders already have a pre-approved loan amount depending on the unutilized credit limit. Cardholders just to apply to instantly receive cash. Also, high value credit card purchases can be instantly converted to flexible monthly instalments.
|Bank/Card Issuer||Quantum of Loan||Tenures||Disbursal Mode and Time||Interest Rate|
|HDFC||Within or above the credit limit||12 to 60 months depending on loan type||Credited to HDFC Savings account||Competitive|
|ICICI||Up to Rs.5 Lakhs||Options ranging up to 36 months||Disbursal takes 7 to 8 working days||Depends on the amount and credit history|
|IndusInd Bank||Depending on the credit limit||Ranging from 6 to 36 months||Credited to the savings account||As per schedule of charges|
|Standard Chartered||Up to Rs.5 Lakhs||Ranging from 12 to 60 months||Credited in account within 2 days||Starts from 1.17% per month|
|HSBC||Minimum is Rs.2000||Multiple tenure options||Can be converted to EMI within 15 days of purchase||15% to 21% per annum|
When you make a cashless transaction with your card, you are essentially borrowing from the issuer. In the same way, you can avail loans based on your credit limit. You will be charged a certain interest rate for the loan.
No. Every issuer has fixed eligibility criteria when it comes to loan on credit cards. This facility is offered only to select cardholders based on the credit repayment history and credit standing.
The interest rate will be comparatively higher and if the debt is not paid on time, you might incur significant penalties.
Most of the loans on credit cards are pre-approved and require no collateral. You do not have to submit any documents while applying for a loan on credit cards.
Issuers provide this loan to select cardholders having good credit rating and commendable credit repayment history. Also, improved income levels over the years have a positive effect on your eligibility.
The key difference is that limit on cash withdrawal is lower than that of loan on credit card. Also, the interest rates for cash withdrawal tend to be higher than that of a loan on credit card.
No. Generally, issuers have a cap on the purchase amount which can be converted to EMI. Also, certain issuers do not allow gold and jewellery purchases to be converted to EMIs.
Transactions made before a certain number of days (as specified by the issuer) can be converted to EMI. Generally, the purchases made before 15 to 30 days can be converted to EMI. Contact your issuer to know more about the purchase time period.
You can convert the balance outstanding on other cards to a single credit card and pay it through easy instalments.
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