Why Should You Consider Taking a Loan on a Credit Card

Why Should You Consider Taking a Loan on a Credit Card?

Credit cards are not only used for shopping purposes, but also you can take loans from credit cards. A credit card comes with a useable credit limit. Also, credit card companies offer pre-approved personal loans. This loan is available at lower interest rate.

But, why should you consider taking a loan on a credit card? We will search for the answer together.

Lenders Offer Loan Against Credit Card

BankLoan amountProcessing FeeRepayment tenure
State Bank of IndiaDepend on Credit LimitUp to 2% + GSTUp to 48 months
HDFC BankDepend on Credit LimitNILUp to 60 months
ICICI BankUp to 20 Lakh1% + TaxUp to 60 months
IndusInd BankDepend on Credit LimitLow processing feesFlexible tenure
HSBC BankDepend on Credit LimitDepend on BankUp to 36 months
Axis BankDepend on Credit LimitDepend on BankUp to 60 months

Advantages and Disadvantages of Credit Card Loan


Convenience: Credit card loans are convenient compared to other loans. If you are using a credit card, you can access hassle-free credit card loans. Borrowers can take loans without going through a lengthy process and additional documents.

Less Documentation: No more documentation is required for credit card loans. As you take a credit card after all documentation process, not required documents second time.

Fast Funds Transfer: If you are facing an urgent cash problem, a credit card loan is an instant solution. Credit Card Issuer Company transfers your funds within 30 minutes. You can immediately access your fund.

Lowest Interest: Get lower interest on credit cards compared to other loans. The favorable interest makes you happy.

Flexible Tenure: Loan against credit card provides a flexible loan term of up to 60 months. Enjoy a lower monthly EMI facility.

Lower Processing Charge: The Bank offers a minimum processing fee of up to 2% which is one of the advantages for borrowers.


Impact on Credit Utilization: If you are using a large portion of your credit limit, it will show a negative impact on your credit score. You must be aware of the credit utilization ratio to save your CIBIL score.

Overspending: As credit card loans offer instant funds, borrowers take loans without planning. You must plan to repay the loan within the period to avoid the debt trap.

Terms and Conditions: Credit card loans vary in different types of fees including annual fees, cash advance fees, and late payment fees. The overall charges increase your overall cost.

Also Read: Instant Loan on ICICI Bank Credit Card

Eligibility for Credit Card Loan

  • To borrow, you must already have a credit card.
  • CIBIL score should be decent for a credit card loan.
  • Credit card monthly bill payments must be on time.

Required Documents

Credit card loans are available without a documentation process. No single document bank will ask for a loan. Because you already submit documents at the time of credit card application. So, the lender does not ask for documents.

Factors to Know About Credit Card Loan

Consider some important points whenever taking a credit card loan:

Credit Limit: Borrower credit limit determines loan against credit card. Your available credit limit transforms into a pre-approved loan.

 Interest Rates: Credit card loans carry higher interest rates. So, you must understand the interest rate that is associated with loans. Typically higher interest means a higher loan amount.

Repayment Terms: You must calculate repayment terms that will fit your pocket. Be aware of paying penalties for late payments. Penalties increase your overall loan amount.

Financial Discipline: Avoid borrowing loans more than you can afford to pay. Calculate your needs and desires before applying for a credit loan.

Also Read: 5 Best Credit Card for Domestic Travel

How to Get a Loan Against Credit Card

1. Check Credit Limit: Ensure you have enough credit card limits and a good credit score record.

2. Contact Your Credit Card Issuer: You may contact the credit card issuer company online, or by phone calls. Sometimes Credit Card Company directly contacts you for credit card loans.

3. Submit Application Form: You can submit an online application form digital procedure. Provide your detailed information correctly.

4. Receive Approval: The credit Card Company checks your loan eligibility. The maximum time will take 24 hours.

5. Fund Transfer: Transfer your eligible credit card loan to a bank account. Access your loan amount whenever you need it.

FAQs on Credit Card Loan

  1. What is a credit card loan?

    Credit cards offer pre-approved personal loans against credit limits. That means you can utilize credit limits for personal loans. This loan is an unsecured form.

  2. Is a credit card loan is good option?

    A loan against a credit card is a good option if you need instant cash. Credit card loans are problem-solving products. However, the interest rate is much higher compared to personal loans. So, if you are facing financial problems, you can go with a credit card loan.

  3. What documents are required for a credit card loan?

    Credit Card Issuer Company provide loans against credit cards without documentation. Not required any documents for credit card loans as this is one of the pre-approved loans.

  4. What is the processing charge of a credit card loan?

    Pay the nominal processing fee of 1% to 2% for credit card loans. The processing charge is truly lower.

  5. Is it a required credit score for a loan against a credit card?

    Your credit score highly depends on credit card loans. The borrower’s decent credit track and repayment history are important parts.

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