A credit card has a set, pre-approved spending limit that allows the owner to make cashless transactions. It enables you to borrow money up to your available credit limit. Although, if you require a larger sum quickly, most banks can offer loans against a credit card.
The bank charges a specific interest rate for loan repayment. The credit for the limit will be applied to your account once the bank has granted your loan request. Equated Monthly Installments (EMI) can be used to pay back this loan throughout a set period of time.
The bank will inquire about your financial situation before extending loans to you. Find out how a credit card loan might help you with your money problems.
What Exactly is a Credit Card Loan?
Credit card loans are pre-approved loans that you are given based on your credit card purchases, repayment history, and other factors. A bank often considers your credit history and payback history because a loan on a credit card is pre-approved and issued without any documents or collateral.
Most banks provide customers ninety days to pay back loans with no interest. Credit card loans offer many benefits, including a lower interest rate, a higher loan amount, and a convenient repayment period. Credit card interest rates typically vary from 2.5% to 3.5% monthly. However, this may differ from one card to another as well as from one issuer to another.
Once your loan is approved, the money will be deposited into your account, or a demand draft will be sent to you.
Credit Card Loans: How Do They Function?
- The credit card company will set the limit based on the applicant’s income.
- When deciding whether to authorize a credit card loan, banks often look at applicants’ credit and repayment histories.
- Your credit score limits the types of loans available to you. You’ll have to pay a certain rate of interest on the loan.
- The loan may be paid using a demand draft or a credit card to savings account transfer.
- To avoid late fees and penalties, you must make your EMI payments on schedule each month.
- Fast credit card loans are available for anything you need them for.
What’s Good About a Credit Card Loan?
- Most credit card loans are pre-approved, so you won’t have to fill out any extra paperwork.
- The EMI can be paid off in equal monthly payments, which helps you spread out the cost.
- Because the bank has previously checked your documentation for a credit card, you may get a loan swiftly.
- Issuers allow you to borrow up to or beyond your credit limit.
- Loan terms are variable, with a maximum credit card loan period of 60 months.
Eligibility Criteria for a Credit Card Loan!
- To get a credit card loan, you must have a credit card.
- You need a minimum of 750 CIBIL score.
- You won’t get a loan from the bank unless you have a good credit score and a track record of making payments on time.
Credit Card Loan Application Process!
Applying for a credit card requires minimal paperwork. A copy of your Aadhaar card, proof of residence, employment paperwork, pay slips, and PAN card may be requested. Here are the steps you need to take to get a credit card loan:
Step 1: Visit your company’s credit card website
Step 2: Provide identification and fill out all required forms.
Step 3: The banks will verify and thoroughly evaluate your application.
Step 4: After the verification, the bank will provide you with a loan.
Credit card loan amount is established according to the borrower’s creditworthiness as shown by their payment history. You may upgrade your credit card to access different resources if your income increases. Additionally, EMIs are added to monthly credit card bills for the agreed time, alleviating many applicants’ burdens.