Most credit cards come with a total pre-approved credit limit. If you are a credit card holder and in urgent need of liquid money, you can apply for a credit card loan against the specified credit limit. Once the loan is approved, the amount is credited to your bank account.
Banks levy interest for credit card loan repayment, which can be done through Equated Monthly Instalments (EMI) for a specified tenure.
See also: What are the benefits of paying rent through credit cards?
Credit card loan features
- Since the loan on credit cards is pre-approved, it will be processed and disbursed quickly without any additional paperwork.
- Most banks offer EMI schemes with credit card loans. Thus, one can choose affordable instalment options.
- Some banks provide loans against other banks’ credit cards through Balance Transfer on EMI. The customer can transfer the outstanding balance on other credit cards to one credit card and choose EMI payment.
- Most banks provide loans within or over one’s credit limit.
Credit card loan benefits
- Compared to other types of loans, quick disbursement of the loan is possible as it is pre-approved.
- No additional documentation is required to avail of the loan.
- Most banks provide the option to transfer the outstanding balance from other cards to a single card and pay through EMIs.
- Most credit card loans require no guarantor or post-dated cheques.
Credit card loan eligibility
Banks have stringent eligibility criteria for credit card loans. The cardholders must have an excellent credit history and a good purchase and repayment pattern.
Credit card loans are unsecured loans and do not require any collateral. Therefore, banks offer credit card loans to select cardholders only.
Credit card loan amount eligibility
The loan amount on credit cards is based on the credit limit. Some banks may offer loans above the credit limit where the availed loan amount would not be blocked against the credit limit. Starting from a minimum purchase amount of Rs 2,000, cardholders can convert their purchases to loans and repay them as EMIs.
Credit card loans by top banks in India
HDFC Bank
One can avail of a loan up to Rs 5,00,000, which can be repaid with an interest of 1.25% within 48 months (four years).
IndusInd Bank
Customers can get a loan against their credit limit or above the credit limit, based on their requirements. They have flexible tenure and EMI options.
Kotak Mahindra Bank
Customers can opt for a credit card loan of up to Rs 5,00,000. The repayment tenure ranges from six months to four years.
IDBI Bank
IDBI Bank provides a General Credit Card Loan, offering a minimum loan amount of Rs 50,000 and up to Rs 5,00,000 with a tenure of up to five years. The interest rate is linked to the bank’s base rate. Individuals engaged in a non-farm entrepreneurial activity are eligible for this loan.
Axis Bank
Customers can get instant loans on their credit cards with a loan processing fee of 1.5% of the loan amount or Rs 500, whichever is greater. It comes with flexible tenure options of 12, 24, 36 or 48 months.
In addition to availing a loan, there are plenty of day-to-day transactions that can be done with a credit card. You can even rent pay through credit card every month.
FAQs
What is a good credit score?
A CIBIL score of 750 or above is considered a good credit score, which increases the chances of getting a high loan amount at a low-interest rate.
What is the tenure for a credit card loan?
Banks offer various tenure options for repaying the credit card loan. It is best to check the details with your bank.
Is a loan on a credit card a good option?
A credit card loan is a good option to meet your immediate financial needs as it is usually processed quickly and without any paperwork.
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