Loan Against Credit Card

What are the features of loan against credit card?

• Loan against credit card is an unsecured personal loan which you can apply for any time when you need instant cash.
• Most of the loans against credit card is pre-approved and you do not need to undergo additional documentation process. Hence, you receive the money instantly.
• Repayment facility through EMI which allows you to pay back the borrowed amount in monthly instalments as decided between you and the bank.
• Some credit card issuers allow you to avail loan that exceeds your credit limit
• You can also use Balance Transfer on EMI facility if it is permitted by your bank. Through this facility, you can transfer the outstanding balance on other credit card to another credit card to repay the latter’s EMI.

What are the advantages of loan against credit card?

The biggest advantage of loan against credit card is the fact that you do not have to go for additional documentation or collaterals to avail loan on credit cards.

• You have the flexibility to repay the loan based on your convenience. The EMI facility allows you to plan your financial commitments ahead of time and you do not feel a sudden burden.
• There is a requirement of guarantors or post-dated cheques when availing for a loan against credit cards.
• The interest on loan against credit card is similar to that of personal loans. On the other hand, the interest on cash withdrawal against credit card is as high as 36% p.a.
• Nowadays mostly all banks provide credit card, hence it comes in very handy in cases when you suddenly need cash.
• You can enjoy flexible loan tenures for loan against credit cards. The maximum tenure for loan against credit card is 24 months.

Interest rate and charges on Loan Against Credit Cards

In India, personal loans have a higher interest rate than that of a car loan or a home loan. The interest rates range from 12% to 24% p.a. Other factors that influence the interest rates are the category of card i.e. Gold, Silver or Platinum and your credit history. To enjoy good terms of loan against credit cards and a favourable interest rate, it is highly important that you maintain a good credit history throughout. Apart from interest rates, there is also a nominal amount of processing fee that is charged.

What are the eligibility criteria for a loan against credit card?

Usually, most banks offer loan against credit card to both old and new customers. For being eligible for availing loan against Credit cards, you must fulfil the following criteria :

• It is mandatory to have a credit card to avail this loan.
• You must have a strong credit history and a high credit limit. Credit cards are offered to customers who have had a spotless record of credit repayment. The bank performs a thorough credit assessment before approving your loan to ensure your ability to repay the loan on time.
• Any customer in the high-income bracket is also eligible to apply for this loan. Moreover, if your income has increased from the existing level, you are also eligible to upgrade your credit card to gold or platinum from silver.
• You can check further on your eligibility for loan against credit card by visiting the nearest branch of the bank or through net banking. In most cases, the amount of loan against credit card is higher than that of cash withdrawn against the credit card.

Documentation required for Loan Against Credit Card

The documents required when you apply for loan against credit card are the same that you would normally require while applying for a credit card. These include :

• Address proof copy such as electricity bill, gas bill, telephone bill, driving license, passport etc.
• Identity proof such as Aadhar Card, PAN card, Passport, driving license etc.
• Payslip for last 3 months and office identity card for salaried employees
• For self-employed professionals, the Income Tax returns for the last 3 financial years.
• 2-3 recent passport size photographs.

Frequently Asked Questions: Loan Against Credit Cards