Credit Card Loan

The situation in today’s economic landscape is such that people are finding it hard to manage their finances on their own. This scenario has become so common that various financial institutions are constantly bringing forth innovative means, such as instant loans on credit cards, to assist people with their financial intricacies. These problems are no doubt prompting individuals to seek flexible and accessible solutions. One of the easiest means is credit cards. 

Today, we delve into the option of instant loans on credit cards and how they can be a great asset in times of need. We will discuss the features of a credit card loan, some of the top banks that you can consider, and various other related information in this guide.  

Features of Credit Card Loan

Starting off, we have to establish that a loan on a credit card is fairly straightforward and approved on an instant basis. Loans are approved based on the credit limit of the card and do not require any document submission or background check. With that as a given, here are some of the features of a loan on a credit card. 

• Depending on customer’s creditworthiness and bank policies, one can get a loan sanctioned that is beyond the credit card limit.
• The repayment duration can be selected from 3 months to 60 months. Much will be dependent on the loan amount and bank policies. 
• The approved loan is disbursed instantly. In some cases, within minutes as well. 
• The loan amount can be utilised as per the individual’s needs. 
• Interest rates can vary from 10.50% to 45%, depending on the bank. 
• A processing fee can be applicable, varying from bank to bank. 

Top Banks Offering Credit Card Loan

Some of the top banks offering a loan on credit cards include the following. 

Eligibility for Credit Card Loan

Although getting a loan on a credit card is easy, there are still some parameters that lenders consider assessing before sanctioning a loan. These parameters must be followed through by the customers without fail. Here are some of the eligibility criteria for a loan on a credit card. 

• The customer must have good reputation with the bank they are considering borrowing from. 
• The credit history of the customer should be on point. 
• The cardholder must be a preapproved customer 

Advantages of a Loan on Credit Card

Some of the advantages of a loan on a credit card are:

• It is a pre-approved and hassle-free way of borrowing money without any additional documents or collateral.
• It is a quick and flexible option to get instant cash in your bank account or as a demand draft.
• It can be used for any purpose, such as medical emergencies, home repairs, travel, education, etc.
• It has a competitive interest rate ranging from 10.50% p.a. to 45% p.a., depending on your credit profile and the bank’s policies.
• It has a nominal processing fee of 1.5% to 3% of the loan amount, depending on the bank’s terms and conditions.
• It has a flexible repayment tenure of 3 months to 60 months, depending on the loan amount and the bank’s terms and conditions.
• You can also transfer the outstanding balance from other cards to one single card and pay the balance off in EMIs on your loan on a credit card. This way, you can consolidate all your loans into a single account and pay them off in EMIs. 

Compare Loans on Credit Cards from Different Banks

It is always prudent to compare the interest rates offered by various financial institutions. This can be a great way to procure the ideal plan suitable for your financial needs. Here is a list of banks with their respective interest rates offered for an instant loan on a credit card. 

How to Take a Loan Against a Credit Card?

Now that you have understood the features of an instant loan on credit card, its eligibility, advantages, etc., you may want to know how to apply for a loan against a credit card. Here is a methodical guide to navigating this financial option:

• Comprehend the Terms: Begin by meticulously reviewing the terms and conditions associated with your credit card, including the prevailing fees and interest rates pertinent to cash advances. It is imperative to grasp the financial implications. 
• Validate Credit Limit: Ensure your available credit limit adequately covers the intended borrowing amount. Note that the credit limit for cash advances may differ from your standard credit limit. 
• Visit ATMs or Banks: To access the funds, visit an ATM or your bank. Insert your card, input your personal identification number (PIN), and select the cash advance option. 
• Determine Loan Amount: Specify the amount you intend to withdraw. It is imperative that one exercise caution, as the interest rate on cash advances usually starts promptly and is typically accompanied by assorted fees.  
• Fee Awareness: Familiarise yourself with the fee structure associated with cash advances, which usually encompass ATM charges, cash advance fees, and potentially higher interest rates than regular purchases. 
• Establish Repayment Plan: Devise a sound plan for repaying the borrowed sum, including the timeframe and payment schedule. Timely repayment is vital to minimising interest accrual.

Crеdit Scorе Implications

The decision to avail yourself of a credit card loan can have both favourable and unfavourable consequences for your credit scorе:

• Positivе Influеncе: Rеpaying thе loan promptly and as agrееd can sеrvе as еvidеncе of rеsponsiblе crеdit managеmеnt, potеntially bolstеring your crеditworthinеss.
• Nеgativе Consеquеncеs: Convеrsеly, failurе to mееt rеpaymеnt obligations may lеad to еscalating crеdit card dеbt, hеightеnеd intеrеst chargеs, and possiblе harm to your crеdit scorе.

Exploring Alternatives to Credit Card Loans

Prior to pursuing a credit card loan, it is advisable to explore alternative avenues that may offer more favorable terms and reduced financial burdens:

• Personal Loans: Investigate personal loan options from financial institutions or online lenders, characterised by lower interest rates and flexible repayment terms compared to credit card cash advances. 
• Emergency Fund: Establishing an emergency fund can serve as a prudent strategy, mitigating the need for high-cost credit during times of financial exigency. 
• Credit Line Enhancement: Initiate communication with your credit card issuer to discuss the possibility of a credit line increase, providing additional available credit devoid of the substantial fees associated with cash advances. 
• 0% APR Balance Transfers: If you possess multiple credit cards, contemplate transferring balances to a card offering a 0% introductory APR on balance transfers. This manoeuvre can facilitate debt consolidation while minimising interest outlays.
  

Creditor Negotiation: In situations of financial hardship, proactively engage with your creditors to explore potential concessions, such as reduced interest rates or deferred payment arrangements.