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

    What is a Loan on Credit Card?

    A credit card comes with a specified pre-approved credit limit which can be used by the holder in a month. However, if you are in urgent need of cash, most banks offer you the facility of loans against credit card. Here, you can take a loan against the credit limit which you have been given. Once the bank approves your loan request, the limit will be credited to your account. Bank charge a certain interest rate for the repayment of the loan. You can repay this loan through Equated Monthly Installments (EMI) for a specified tenure.

    Top Banks Offering Loan on Credit Card

    There are many banks which offer the facility of loan on credit card. Top banks in the country which provide loan on credit card are:

    ICICI Bank

    ICICI Bank is one of the largest banks in the country and is offering a personal loan on credit card to selected ICICI Bank customers. This depends on the credit score, repayment habits of the cardholder. The maximum loan given by the bank under this scheme is Rs.10 lakh and a flexible tenure range of up to 60 months or 5 years. The loan amount will be directly credited to your Savings Account and there is minimal documentation involved in this procedure.

    HDFC Bank

    HDFC Bank offers the facility of loan on credit cards as well which is pre-approved and will be blocked against your credit limit. HDFC Bank will offer a maximum loan of Rs.5,00,000 and can be repaid with an interest of 1.25%. The bank offers a range of tenure ranges going up to 48 months or 4 years. Since the loan is pre-approved, there is no extra documentation needed and the loan is credited to your savings account almost immediately.

    IDBI Bank

    IDBI Bank also offers a loan on your credit card which is termed as a General Credit Card Loan. The minimum loan amount offered is Rs.50,000 and the maximum is Rs.5 lakh. The tenure range is a maximum of 5 years and the interest rate is linked to the base rate of the bank. Any individuals who are engaged in non-farm entrepreneurial activity are eligible for this loan.

    Kotak Mahindra Bank

    With a Kotak Mahindra Bank credit card, you can get a loan on it of up to Rs.5 lakh with attractive interest rates. The tenure of repayment ranges from 6 months to 4 years. Once the loan is applied for and approved, the amount is instantly credited to your savings account of Kotak Mahindra Bank or of any other bank. The customers who have a good credit score, transaction patterns, and repayment habit will be eligible for the loan against credit card.

    IndusInd Bank

    A loan against your credit card is also given by IndusInd Bank which includes zero documentation. With your IndusInd credit card, a pre-qualified loan is given to you. You can get a loan against your credit limit or loan above credit limit as well depending on your requirement. The loan against credit cards come with flexible tenure options and attractive interest rates.

    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.

    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?

      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.

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

      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.

    3. What is the disadvantage of loan on credit cards?

      The interest rate will be comparatively higher and if the debt is not paid on time, you might incur significant penalties.

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

      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.

    5. What are some of the factors that affect my eligibility for 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.

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

      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.

    7. What will be the extra charges for a loan on credit card?

      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.

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