Credit cards come with a specific pre-approved line of credit that the holder can use within a specified period. However, if you need cash urgently, most banks offer credit card loans. Here you can borrow according to the credit line granted to you. Once the bank approves your loan application, the limit will be credited to your account. The bank charges a certain interest rate for the repayment of the loan. You can repay this loan through equivalent monthly installments (EMI) over a fixed term. In this article, we will know about credit card loans and compare the loan offers from various banks.
Credit card loan:
In principle, when you make any transaction with your credit card, you are essentially borrowing from the issuer. In the same way, you can qualify for loans based on your credit line. You will have to pay a certain interest rate on the loan. Now the question arises, how is a credit card loan different from a credit card cash withdrawal? Well, the main difference is that the cash withdrawal limit is lower than that of a credit card loan. In addition, cash withdrawal rates tend to be higher than credit card loan rates.
What are the features of a credit card loan?
Different banks offer a complete loan program when it comes to credit card loans. Here are some features of a credit card loan.
- Since most credit card loans are pre-approved, you don’t need to submit any additional documents, the loan will be processed and disbursed quickly.
- With EMI programs offered by issuers, you’ll be able to split your expensive purchases into easy and affordable installments.
- Some banks also lend on other banks’ credit cards through balance-to-EMI, where you can transfer outstanding balances from another credit card to a credit card and pay EMI.
- Issuers also give you the option of borrowing within or above your credit limit.
Eligibility for credit card loans:
Most credit card loans are unsecured and require no collateral for the loan. Therefore, the loan is only available to certain cardholders. Issuers have strict eligibility criteria when granting a credit card loan. Cardholders must have a commendable credit history and a good purchase and repayment pattern to be able to apply for a credit card loan.
The amount of a credit card loan usually depends on the credit limit. Some issuers also offer credit limit loans where the loan amount used will not be locked against the credit limit. Furthermore, from a minimum purchase amount of Rs 2000, you will be able to convert your purchases into a loan and pay with EMI.
Why one should consider a credit card loan?
- Most credit card loans are pre-approved and unsecured. You do not have to submit any documents or collateral to qualify for a credit card loan.
- With a credit card loan, you have the ability to convert your expensive purchases into easy monthly payments.
- Most issuers also give you the option to transfer outstanding balances from other cards to a single card and pay with EMI.
- Most credit card loans do not require a guarantor or post-dated cheque.
Top banks that offer credit card loans:
There are many banks that offer credit card loans. The major banks in the country that offer credit card loans are:
HDFC Bank offers credit card loans that are pre-approved and will be locked to your credit limit. HDFC Bank will provide a maximum loan of rupees five lakh which can be repaid at an interest rate of 1.25%. The bank offers multiple tenures in a range of 48 months to 4 years. As discussed above, most of these loans are pre-approved, so no additional paperwork is required and the loan is credited to your savings account almost instantly.
Kotak Mahindra Bank
With Kotak Mahindra Bank credit card you can get loan up to Rs 5 lakh with an attractive interest rate. The repayment period is from 6 months to 4 years. Once the loan is registered and approved, the amount will be immediately credited to your savings account at Kotak Mahindra Bank or any other bank. Customers with good credit ratings, trading habits, and repayment habits will be eligible for a credit card loan.
IDBI Bank also offers a loan on your credit card, called a General credit card loan. The minimum loan offered is Rs 50,000 and the maximum is Rs 5. The maximum loan term is 5 years and the interest rate is calculated according to the basic interest rate of the bank. Anyone who conducts a non-farm business can benefit from this loan.
A loan on your credit card is also issued by IndusInd Bank without any documentation. With your IndusInd credit card, a pre-qualified loan will be issued to you. You can also borrow under a credit line or borrow above a credit line depending on your needs. Credit card loans come with flexible term options and attractive interest rates.