Loan Against Credit Card: A Smart Solution for Emergencies
Credit Cards are a great way to pay for your daily expenses but did you know that you can use them to get a loan too? A Loan Against a Credit Card is a smart way to get funds faster. This financial solution allows Credit Card users to easily access cash based on their Credit Card limit when they need it.
Read more to know about availing a Personal Loan Against a Credit Card, its benefits, and things to consider before applying.
Defining a Loan Against Credit Card
Taking out a Loan Against Credit Card involves accessing a loan amount linked to your Credit Card’s limit without the need for collateral requirements, with a simple and speedy application process.
This type of loan allows you to borrow a portion of your Credit Card limit or even extend the loan amount based on the policies set by your card issuer.
Working on a Loan Against Credit Card
There’s no need to submit an application and the loan amount you qualify for is determined by either a percentage of your credit limit or an extra amount approved by the card issuer.
You pay back the loan in instalments called EMIs over a period that’s decided when you borrow the money. The interest rate for Credit Card loans may differ based on the bank and your credit history.
Highlights of a Loan On Your Credit Card
Credit Card loan is a good option for people who need instant funds to fulfil certain emergency needs. The following features make it a great choice for cash requirements.
- Fast Access to Funds
A major benefit of this loan is the access to instant funds as it offers you immediate access to money without the hassle of lengthy approval procedures or the need to provide extra paperwork.
- No need For Collateral
When you take out a Credit Card loan, it’s a type of loan which means you don’t have to provide any security like property or savings to qualify for it.
- Easy Repayment Options
Repay the loan easily by making fixed payments or EMIs. This method assists in handling your finances by enabling you to repay the loan in convenient instalments over some time.
- Flexible Tenure
Banks provide flexible repayment options for loans taken against Credit Cards that can span from a month to years to accommodate your budget effectively.
Factors to Consider Before Taking a Loan Against Credit Card
Before opting for a Credit Card loan, it’s important to take into account certain factors that can impact the loan situation:-
- Interest Rate Comparison
Another important factor to know is the rate of interest. A Loan Against a Credit Card generally comes with a competitive interest rate since it is unsecured and depends on your creditworthiness. So analyse your financial condition when applying for the loan.
- Impact on Credit Card Limit
Another crucial factor to consider when taking a Loan Against Credit Card is its effect on your available credit limit. Once you avail the loan, the corresponding amount gets blocked from your credit limit, reducing your purchasing power until the loan is repaid.
- Loan Amount and Requirement
Banks usually offer Loan Against Credit Cards based on your card’s credit limit, which means the amount might be limited. If you require a higher loan amount, you need to make sure that your Credit Card limit is high and you can also repay the loan on time.
- Credit Score Consideration
Your credit score plays a crucial role in securing the loan. A high credit score can help you secure better terms and lower interest rates. Since a Loan Against a Credit Card depends on your credit score, it might be easier to obtain a loan with an improved credit score.
Eligibility to Apply for a Loan Against Credit Card
To qualify for a Loan on Credit Card, you should have:
- A good credit score and a strong repayment history.
- A consistent track record of spending on your Credit Card.
** Please note that the final approval is subject to the lender’s internal policies.
Documentation
No documents are required for a Personal Loan on a Credit Card.
Conclusion
Taking out a loan using your Credit Card is an efficient method to access funds promptly when the need arises – be it for emergencies, significant purchases or handling expenses. This financial option can truly come to your rescue in times of need. Nonetheless, evaluating the interest rate on the Credit Card loan along with repayment conditions is crucial before committing to the loan.
Leading banks like ICICI Bank offer the option to take a loan on your Credit Card, providing quick access to funds for various financial needs. These loans can be availed through internet banking, mobile apps, or customer support, with flexible EMI repayment options. It’s important to review interest rates and terms before applying.
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