Santa Claus comes around just once a year. In the meantime, there are Credit Cards.
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    Credit Card Loans

    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.

    Features of a Loan on Credit Card:

    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.

    • Since most of the loan on credit cards are pre-approved, you need not submit any extra documentation, the loan will be processed and disbursed quickly.
    • With EMI schemes offered by the issuers, you will be able to break your expensive purchases into easy affordable instalments.
    • Some banks also offer loan against other bank’s credit card through Balance Transfer on EMI where you can transfer the outstanding balance on other credit cards to one credit card and pay the EMI.
    • Issuers also offer you the option of taking a loan within or over your credit limit.

    Eligibility for Loans 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.

    Advantages of a Loan on Credit Card:

    • Most of the credit card loans are pre-approved and unsecured. You don’t have to submit any documents or collateral to avail a loan on credit card.
    • With loan on credit card, you have the option to convert your expensive purchases to easy monthly instalments.
    • Most issuers also provide you the option to transfer the balance outstanding from other cards to one single card and pay in EMIs.
    • Since a loan on credit card is pre-approved, it is easy to apply and is disbursed quickly when compared to other loans.
    • Most of the loans on credit card require no guarantor or post-dated cheques.

    Top Bank offering loan on Credit Card in India:

    • IDBI General Credit Card Loan (IDBI GCC)
    • 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 Loan on Credit Cards
    • 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.

    • HSBC Loan on Phone
    • 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.

    • Kotak Mahindra Bank Personal Loan on Credit Cards
    • 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.

    • ICICI Personal Loan on Credit Card
    • “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 Bank Loan on Credit Cards
    • 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.

    Compare Loan on Credit Cards from Different Banks:

    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

    FAQs regarding Loan on Credit Cards:

    1. How do loan on credit card work?
    2. 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.

    3. Can every person having a credit card get a loan on credit card?
    4. 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.

    5. What is the disadvantage of loan on credit cards?
    6. The interest rate will be comparatively higher and if the debt is not paid on time, you might incur significant penalties.

    7. What documents do I require to apply for a loan on credit card?
    8. 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.

    9. What are some of the factors that affect my eligibility for loan on credit cards?
    10. 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.

    11. How is the loan on credit cards different from cash withdrawal using a credit card?
    12. 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.

    13. Can I convert all my purchases to EMI?
    14. 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.

    15. What will be the extra charges for a loan on credit card?
    16. You will be charged a certain amount as processing fee. Also, you might be levied a pre-payment penalty if you decide to foreclose the loan.

    17. I purchased a TV four months ago using my credit card. Can I convert it to EMI?
    18. 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.

    19. What is the meaning of balance transfer?
    20. You can convert the balance outstanding on other cards to a single credit card and pay it through easy instalments.

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