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Home » Loan Against a Credit Card a Detailed Overview of How to Apply and Who Can Apply

Loan Against a Credit Card a Detailed Overview of How to Apply and Who Can Apply

Introduction – A personal loan taken out against a credit card is referred to as a loan against a credit card. If you are a credit card holder, you can easily apply for a quick loan against your card. A loan against a credit card is not subject to the same paperwork requirements as a personal loan. Several papers are often required to prove your eligibility for a personal loan. A loan against a credit card is an unsecured loan that works like a same-day cash loan.

We frequently mix up cash withdrawals from credit cards and loans secured by credit cards. By taking out a loan against a credit card, we often assume that the bank will increase the amount of credit available on the card and allow cash withdrawals. But this is a false impression. You are really given a loan by the banks against your current credit card.

The ideal alternative for individuals who want quick cash to handle emergencies and unforeseen personal issues is a loan against a credit card. When your credit card’s cash withdrawal cap is insufficient to cover your financial needs, you turn to these loans. Additionally, money withdrawals using your credit card have higher interest rates. However, banks charge lower interest rates for loans secured by credit cards. Additionally, the loan gets reimbursed swiftly and without any paperwork.

You have the option of receiving the loan amount as a demand draft or as an instant bank account transfer. Getting a loan against your credit is advantageous since it carries a lower interest rate than cash withdrawals from credit cards.

A credit card loan seems to make financial sense. That is why a lot of individuals choose loans secured by credit cards. Credit card loans are also referred to as pre-approved financing or “pre-qualified lending.

Leading Banks Offering Credit Card Loans

BankInterest RateTenure
State Bank of IndiaAt the bank’s sole discretionWithin 48 Months
HDFC BankAt the bank’s sole discretionWithin 60 Months
IndusInd BankAt the bank’s sole discretionFlexible Tenure
HSBC Bank10.99 OnwardsContact the Bank Branch for detailed information

Eligibility for Loans Against Credit Cards

If you meet the requirements listed below, you may be able to borrow money against your credit card.

  • Banks typically provide credit card loans to both current and potential consumers.
  • However, banks like HDFC only make it available to current HDFC Credit Card customers.
  • To be eligible for this loan, you must have a credit card account.
  • Additionally, you must have a solid credit history.
  • Banks will grant you a loan against your credit card if you have a solid history of repaying your debts and a decent credit score.
  • Both this loan and top-up credit card loans are open to applicants with high- or increased-income levels.
  • You may upgrade your credit card by switching from the silver to the gold category with an increase in income.

On the other hand, you may also use online banking and mobile banking and visit your local branch to confirm whether you’re eligible before asking for a loan against the credit card you use. The credit limit on the card, which is additionally contingent on your monthly earnings, repayment history, and supporting paperwork, determines the amount of the loan you get.

The amount borrowed via a credit card is typically greater than the card’s cash withdrawal limitation. If the loan accepted exceeds the cash withdrawal limitation, your banking institution may restrict the credit card’s cash withdrawal limits. Until the loan balance decreases and drops within the cash withdrawal limit, you won’t be permitted to use your card to make any cash withdrawals.

Application for Credit Card Loans: The Documentation Process

If you’re applying for a loan against your credit card, no paperwork is needed. Considering that you need a credit card to be approved for a loan against one, So, whenever you submit an application for a credit card, you provide your bank with all the necessary paperwork. The bank may approve a loan against your credit card depending on the documentation you have previously provided and the financial relationship you have with the lender.

Generally, whenever you request a credit card, a bank will want the following documents:

  • Your address proof, such as your most recent telephone bill, power bill, driver’s license, passport, etc.
  • A document proving your identification, such as a passport, driver’s license, voter ID card, PAN card, etc.
  • Several current passport-size photos
  • Pay Stubs from the previous three months for salaried workers
  • An office ID card copy for those who are paid.
  • A certified copy of the most recent ITR (income tax return)
  • A copy of the PAN card must be submitted by self-employed people.

How to Get a Personal Loan Against Your Credit Card

The application process for a personal loan against a credit card is very simple. You may submit an application for a personal loan in favour of a credit card online by browsing the web page of the lending institution from which you want to borrow money.

You must submit the completed form along with the required documents. The banking institution will check all of the paperwork you submit, and when these have been verified to be correct, the amount of the loan will be processed and disbursed to your banking account.

You may submit an application for a personal loan with a credit card by going to the closest branch of the banking institution where you want to use this service. Make sure you have everything you need.

Make sure you have all of the necessary documents with you. A bank representative will contact you and assist you with the application process for a personal loan that is secured against a credit card.

Interest rates for loans secured by credit cards

For individual Loans in India, interest rates range from 12% to 20%, which is a little bit more than the interest rates applied to other loans such as auto loans, mortgages, and other types of loans. Due to the fact that a loan against a credit card is a form of personal loan, the interest rate is a little higher.

For instance, the interest rate on a loan agonist credit card from HSBC Bank ranges from 15% to 21%. Additionally, the interest rate on a loan secured by a credit card varies depending on your credit profile and the type of card you hold (gold, silver, or platinum). Because banks take your credit history into account when proposing an interest rate, having a solid credit profile is crucial.

Highlights and Advantages of Credit Card Loans

Anytime you need it, get fast cash.

  • Enjoy enticing and lower interest rates than those charged on credit card withdrawals of cash.
  • No paperwork is necessary.
  • You may apply for it either online or by calling a specific number.
  • Once approved, take advantage of swift processing and disbursement.
  • You are free to apply at any time and from any location.
  • A particular kind of unsecured loan for personal use is a loan against a credit card.
  • Low processing costs are incurred.
  • The loan can be repaid in monthly payments. Your credit card will be charged for the monthly EMIs each month.
  • Credit card loans are typically approved for a maximum duration of 24 months.10. The type of credit card used to secure a loan will determine the interest rate.
What exactly does a credit limit mean?

Your credit card’s credit limit is the maximum you are permitted to spend with it. Your bank takes into account factors including your yearly income, credit history, and ability to repay when determining the credit limit for your card. Additionally, banks adjust your credit limit based on your spending and payback history from the prior year.
The bank may raise your credit limit if you make on-time credit card payments and keep a positive working relationship with them. However, the bank may reduce your credit limit if you frequently make late or postponed payments and don’t keep a solid connection with it.

What exactly is a credit card loan?

You may use your credit card to apply for this type of unsecured personal loan. This loan is provided by banks to assist you in meeting your immediate financial demands.

I want to make a request for a loan against my credit card. Do I need to have good credit?

Yes, maintaining good credit is crucial if you want to get approved for a loan against your credit card, in addition to getting lowered rates of interest on your principal.

Do I have to pay a processing charge for a credit card loan?

Banks actually charge processing fees for credit card loans. Surprisingly, there is a very small processing fee that must be paid.

What paperwork must I provide to apply for a loan secured by a credit card?

No additional documentation is required when applying for a loan against your credit card. No paperwork is required.

Can I submit an online credit card loan application?

Yes, you may use net banking to submit an online application for it. Additionally, you can use phone banking or go to your branch to submit an application.

Is there any distinction between the interest rates applied to credit card loans and cash withdrawals on credit cards?

Yes, you’ll find a difference between the interest rates applied to cash withdrawals made using a credit card and loans secured by credit cards.

Can new clients apply for a credit card loan?

Yes, new as well as existing consumers of a bank may apply for a loan against a credit card. However, obtaining a loan against a credit card requires the possession of a credit card.

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