Loan against credit card is a kind of personal loan. If you are using a credit card, you can easily apply for an instant loan against your card. Unlike a personal loan, a loan against credit card does not require documentation. A personal loan normally needs a few documents in support of your eligibility. Loan against credit card is an unsecured loan like same day cash loans.
Often we confuse between loan against credit card and cash withdrawals on credit cards. By loan against credit card, we tend to think that bank will increase the credit limit on credit card and one can withdraw cash through credit cards. But, it’s is a misconception. Banks actually provide you with a loan against your existing credit card. Loan against credit card is a best option for those who need immediate cash to deal with urgent and unpredictable personal situations. You opt for such loans when the cash withdrawal limit on your credit card is not sufficient to fund your financial requirements. Besides, cash withdrawals on your credit card come with higher rates of interest. But, banks charge lower rates of interest on loan against credit card. Also, the loan is disbursed quickly with no documentation.
The amount received as loan is offered to you in the form of a demand draft or through a direct transfer to your bank account. Given that low interest is charged on loan against credit card than cash withdrawals on credit cards, a loan against your credit card sounds economically viable. That’s why many people opt for loan against credit card. Loan against credit card is also known as pre-approved loan or pre-qualified loans.
| Bank | Loan amount | Interest rate | Processing Fee | Repayment tenure |
|---|---|---|---|---|
| State Bank of India | At the discretion of the bank | At the discretion of the bank | Up to 2% of the loan amount subject to a minimum of Rs. Rs.499 and a maximum of Rs.3,000 | Up to 48 months |
| HDFC Bank | Loan amount will be within the credit limit of your HDFC credit card | At the discretion of the bank | NIL | Up to 60 months |
| Indusind Bank(Indus Easy Loan) | At the discretion of the bank | At the discretion of the bank | Low processing fees | Flexible tenure |
| HSBC Bank | At the discretion of the bank | 10.99% onwards | Contact the bank for information | Contact the bank for information |
Many banks in India like HDFC Bank, HSBC Bank & Citibank offer loan against credit card. HDFC Bank offers Insta Loansand Insta Jumbo loans against your HDFC Bank Credit Card. These are preapproved loans. You can easily apply for these loans. The bank offers immediate disbursal of the amount once the loan is approved. An Insta Loan helps you receive fund within the credit limit of your HDFC Bank Credit Card. On the other hand, an Insta Jumbo Loan offers you fund over and above the credit limit of your HDFC Bank Credit Card. The amount gets credited to your savings account in 60 minutes.
You are eligible to get a loan against your credit card if you fulfill the following conditions:
However, before applying for a loan against your credit card, you can also check your eligibility by using the following means – net banking, phone banking and visiting your nearest branch. The amount you receive as loan is dependent on the credit limit on your card which is again dependent on your income, repayment history and documentation. Normally, the amount of loan against your credit card tends to be higher than the cash withdrawal limit on your credit card. Your bank may block the cash withdrawal limit on your credit card, if the loan taken exceeds the cash withdrawal limit. You will not be able to use your card to withdraw any cash until the loan amount comes down and falls below the cash withdrawal limit.
No documentation is required to apply for a loan against your credit card. Because, in order to apply for a loan against credit card, you have to have a credit card. So, when you apply for a credit card, you submit all required documents to your bank. Based on those documents that you have already submitted and the relationship you build with your bank, the bank can sanction a loan against your credit card. Normally, a bank asks for the following documents when you apply for a credit card:
The process to apply for a personal loan against credit card is very simple. You can apply for a personal loan against credit card online by visiting the official website of the lender from whom you wish to avail this facility. You will have to submit the application form along with the necessary documents. The bank will verify the documents submitted by you and if they are found to be right, the bank will disburse the loan amount to your bank account.
You can apply for a personal loan against credit card offline by visiting the nearest branch of the bank from you wish to avail this facility. Make sure to carry all the required documents along with you. A representative from the bank will get in touch with you and will help you with the process of applying for a personal loan against credit card.
Personal Loan Interest rates is India start from 12% and go up to 20% which is slightly higher than the interest rates charged on other loans like car loan, home loan etc. Loan against credit card is also a kind of personal loan, and so the interest charged on loan against credit card is slightly higher. For example, HSBC Bank charges between 15% to 21% interest on loan agonist credit card. Also, the rate of interest on loan against credit card varies based on the type of card (gold, silver and platinum) you have and your credit profile. Therefore, maintaining a good credit profile is very important as banks considers your credit history before quoting a particular interest rate on your loan.
Ans: Credit limit refers to the maximum amount you could spend by using your credit card. Your bank determines the credit limit of your card by considering details such as your annual income, credit history and repayment capacity. Banks also revise your credit limit as per your previous year’s record in terms of spending and repayment. If you pay your credit card bills on time and maintain a good relationship with your bank, the bank may increase your credit limit. But, if make delayed payments or postpone your payments regularly, and don’t maintain a steady relationship with the bank, it may revise your credit limit downward.
Ans: It is a kind of unsecured personal loan which you can take a loan with the help of your credit card. Banks offer this loan to help you resolve your urgent financial needs.
Ans: Yes, it is very important to maintain a good credit history to apply for a loan against your credit card and get discounted rates of interest on your principal amount.
Ans: Yes, banks do charge processing fee for loans against credit card. However, you need to pay a very nominal amount as processing fee.
Ans: No, you don’t have to submit any new documents to apply for a loan against your credit card. It is zero documentation process.
Ans: Yes, you can apply for it online by using net banking. Also, you can apply for it by using phone banking or visiting your branch.
Ans: Yes, there is a difference in interest charged on cash withdrawals on credit card and loan against credit card. Banks normally charge higher rates of interest on cash withdrawals on credit card than a loan against credit card.
Ans: Yes, new customers can also avail a loan against credit card along with existing customers of a bank. But, having a credit card is mandatory to get a loan against credit card.
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