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ToggleCredit cards are a small plastic tool that allows you to buy things without paying for them. However, a bill is generated at the end of the month, and you have to pay it within the due date. However, sometimes you may require an additional amount for some emergencies. In such cases, you can take a loan against a credit card. Taking a loan against a credit card is a very common phenomenon, and almost all banks offer such loans. Read to find out what a loan against a credit card means and how to take one.
A loan on a credit card is similar to a personal loan. It is an unsecured loan, doesn’t require any collateral, and has a fixed tenure. The maximum loan amount is limited to the credit limit on the card, and the interest rate is lower than the credit card interest rates. Once the loan is approved, you will receive it either through a demand draft or in your account.
Following are the features of a loan against a credit card
If you need money for some unforeseen expense or emergency, go ahead and take a loan against your credit card. However, you can take a loan only if you are eligible.
Following are the eligibility criteria for taking a loan against a credit card.
You don’t need any documents for applying for a credit card loan as you would’ve submitted them already while applying for a credit card. Since it is a must to have a credit card to get a credit card loan, the following documents are required to apply for a credit card.
You can apply for a credit card loan online by logging into your net banking facility. Alternatively, you can apply offline by visiting the bank branch and submitting an application. Following are the steps required to apply for a credit card loan online.
The bank will verify your documents, and upon successful verification, you will get the loan amount in your account or get a demand draft.
The interest rate for a loan against a credit card varies between 12% and 20%. Since credit card loans are personal loans, their interest rate is slightly higher than the car or home loans. The interest rate varies from bank to bank. Moreover, it also depends on your credit history and the type of credit card (silver, gold or platinum). A good credit score or higher grade card can fetch you lower interest rates.
Almost all banks provide loans against credit cards, and the following are just a few.
Here are some of the banks with their loan on cards offerings –
Note: These are just for informational purposes only. The interest rates, offers, fees, and terms & conditions might change/ might be incorrect after publishing this data. Please check the official websites for detailed insights on this.
Bank Name / Product Name | Credit Limit | Processing Fee Terms | Interest Rate | Late Payment Terms | Fee | Link for Details |
SBI Credit Card Encash |
Based on individual details | A one-time processing fee of 2%, minimum of Rs. 499 a maximum of Rs. 3,000. | 13.50% to 20.25% p.a.
Bureau score <=700 Or no score is available: 18.25% to 20.25% p.a |
Late payment fees and a maximum credit charge of 3.5% p.m. (42% p.a.) for Unsecured card, 2.75% p.m. (33% p.a.). for Secured card and 2.75% p.m. (33% p.a.) | Foreclosure fee amounting to 3% of the Principal outstanding | Encash – Get instant cash| SBI Card |
HDFC Bank – Insta Loan and Insta Jumbo Loan | Based on individual details | Processing fee – up to Rs. 999 based on the customer’s eligibility or offer details. | Insta Loan Minimum interest rate: 11.88% Maximum interest rate: 22.32%Jumbo Loan Minimum interest rate: 11.88% Maximum interest rate: 21.96% |
– Auto Debit return penal charges 2% on payment amount subject to minimum Rs.450 will be levied.
– Non-payment or partial payment of EMI outstanding will attract late payment penalty of Rs.500 plus GST |
3% on the outstanding principal amount plus GST | HDFC Bank – Loan on Credit Card |
IndusInd Bank – Indus Easy Loan | Based on individual details | 2.5% of the loan amount or Rs. 250, whichever is higher. | The annual interest rate will be communicated at the time of your Loan request | Limited information on the official website OR depends on case-to-case basis | Limited information on the official website OR depends on case-to-case basis | Loan on Credit Cards – IndusInd Bank |
HSBC – Loan on Phone | Limited information on the official website OR depends on case-to-case basis | 2.5% of the loan amount or Rs. 200, whichever is higher. | The annual interest rate will be communicated at the time of your Loan request | Limited information on the official website OR depends on case-to-case basis | 3% on the outstanding principal amount of the loan, subject to a minimum of INR250 | https://www.hsbc.co.in/credit-cards/loan-on-phone/ |
Kotak Mahindra Bank – Loan on Credit Card | Up to Rs. 15,00,000 | Limited information on the official website OR depends on case-to-case basis | 12% to 25% per annum on reducing balance | Limited information on the official website OR depends on case-to-case basis | 3% on the outstanding principal amount. | Kotak Bank – Personal Loan on Credit Card |
IDBI Bank General Credit Card Loan (IDBI GCC) | Minimum – Rs. 50,000 Maximum – Rs. 5,00,000 |
Limited information on the official website OR depends on case-to-case basis | Limited information on the official website OR depends on case-to-case basis | Limited information on the official website OR depends on case-to-case basis | Limited information on the official website OR depends on case-to-case basis | IDBI Bank Geneal Credit Card Loan |
ICICI Bank – Personal Loan on Credit Card | Maximum up to Rs. 20 Lakh. | 1% of total loan amount | Starting from 14.99% | Due amount can range anywhere from 1.25% to 3.67% on total amount due. | Up to 3% | ICICI Bank – Personal Loan on Credit Card |
Credit cards are an easy way to get instant cash during emergencies. However, they are still in debt, and you still have to pay interest. Hence always be emergency ready by having an emergency fund that covers at least six months of your expenses. If your fund does not cover your emergency, go for a credit card loan. This way, you are reducing your total debt.
Yes, you can definitely borrow money from a credit card through a loan or a cash withdrawal. A credit card loan has less interest compared to cash withdrawal.
A credit card is a saviour if you require money urgently. However, nothing is better than having an emergency fund to help you in case of any emergency.
You can borrow 20%-40% of the total credit card limit as cash. So if your credit card limit is Rs 50,000, you can get Rs 10,000 – Rs 20,000 as cash.
Credit card loan interest rates vary from bank to bank and range between 12%-20%. The interest rates also depend on your credit score or the type of card you hold. If you have a good credit score and hold a platinum card, your interest rate will be lower compared to a person with a bad credit score or a lower grade card.
Yes, you can transfer money from a credit card to a bank account using a cheque, NEFT, RTGS, or an ATM.
To get a credit card loan, you must have a credit card and a good credit score. Only then can you get a credit card loan.
Yes, credit cards can be an expensive way to borrow money. The interest on credit cards varies from bank to bank. They can go as high as 45% per annum for some banks. The interest on a credit card is charged only when you default on your payment. If you pay your bill within the grace period, you need not pay any interest. Credit cards can be a blessing if you use it properly. The reward points, and cashbacks will end up saving you more money than you intend to spend.
If you withdraw cash from your credit card, you can be charged interest up to 3.5% per month, which is around 42% per annum.
It is impossible to withdraw money from a credit card without charges. However, some banks allow you to withdraw cash without charges up to a certain limit. Check with your bank to see the limit on credit card cash withdrawal without charges.