Understanding The Concept Of Loan On Credit Card

Even though you may have all your finances planned out, a sudden requirement may come up. Your savings may be insufficient to meet the requirement. Also, it is not wise to exhaust all your savings on a single financial requirement. Hence, banks come to your rescue. Through banks, you can get the required amount and repay it in equated monthly instalments.

Banks typically have two offerings: Credit Cards and Loans. Credit Card is a pre-approved line of credit. You only need to swipe or tap the card to make any repayment electronically. Loan is another financing option you can get for a fixed tenure and interest rate. Recently, the concept of Credit Card Loans is gaining tremendous popularity. Let us understand the concept better.

About Loan on Credit Card

Credit Card Loan is popularly called Loan on Credit Card. It is a financing option, whereby you can apply for the Loan against the utilised credit limit for your card. It is an Unsecured Loan and is generally pre-approved. Note, the Loan amount offered entirely depends on your credit limit. For instance, if your total credit limit is Rs. 10 lakh.

The utilised credit limit is somewhere around Rs. 6 lakh. This means you can apply for a Loan against the unutilised credit limit of Rs. 4 lakh.

Loan on Credit Card eligibility

Following are the Loan on Credit Card eligibility specifications:

• You should be an existing customer of the applying bank. Most banks hardly extend Loans to new customers.
• You need to hold the bank’s Credit Card.
• You should have a good credit score and history.

Loan on Credit Card key features and benefits

• You can avail the Loan amount at attractive interest rates. Generally, leading banks charge no interest for 90 days. However, this varies for every bank and even applicant.

• You can apply for the Loan for a flexible tenure ranging anywhere between 12 to 60 months. This allows you to pick a suitable tenure and repay the Loan amount as per your affordability. Be mindful of the interest liability when deciding on a tenure. A longer tenure translates to a higher interest liability and vice-versa.

• Since the Loan is pre-approved it involves minimal documentation. You can apply for the Loan either offline or online. The online application is preferable as it is time-saving and hassle-free.

• On approval, the Credit Card Loan amount is credited to your Bank Account within the shortest time frame. This allows you to meet your financial requirements in time.

• The Loan has no end-use restriction. You can utilise the Loan amount to meet any requirement you may have.