Loan against Credit Card: The best alternative to Personal Loans

Personal loans are useful, but you can avoid paying interest rate in personal loans by taking a loan against your credit card

A credit card loan is an interesting product offered by many banks, including IDFC FIRST Bank. It is a secured loan that attracts less interest. Despite being easier to avail of than personal loans, a loan against a credit card is not used often. The reason is that people are unaware of the product. This article will help you get the knowledge you need about what is a credit card loan and how it differs from a credit card cash withdrawal.

What is a loan on a credit card?

A credit card loan is comparable to a personal loan. It is unsecured (no collateral required) and has a fixed rate of interest for a specific duration. The size of the loan does not exceed the credit card's limit, and the interest rate is lower than the current rates on credit card transactions (annual credit card interest rates are typically between 35-40%).

Having learnt the meaning of an outstanding amount in a credit card, let us learn how to deal with it.

Difference between a credit card cash withdrawal and a loan against a credit card

You can withdraw cash from your credit cards. The feature comes in handy during emergencies, although the trade-off is that you must pay high interest. Most credit card providers charge a sizable fee on credit card cash withdrawals.

The better alternative would be to take a personal loan against a credit card. These loans work best when your credit card's cash withdrawal limit is insufficient to meet your financial needs.

Since a loan against a credit card attracts lower interest than cash withdrawals on credit cards, it is economically more viable.

Eligibility criteria for getting a credit card loan

If you meet the following requirements, you may be eligible for a credit card loan:

• Banks offer credit card loans to both existing and new consumers.
• To qualify for this loan, you must have a credit card with the bank in question.
• You must also have a positive credit history. Banks provide a loan against your credit card if you have a strong credit repayment history and a high credit score.
• Credit card loans are available to people with high- and improving-income levels. Increased income allows you to upgrade your credit card from silver to gold, which boosts your loan eligibility.

You can check your eligibility before applying for a credit card loan through net banking, phone banking, or by visiting your bank branch. The money you get as a loan is determined by your credit card's credit limit, which is determined by your income, repayment ability, and documents.

If the loan taken exceeds the cash withdrawal limit, your bank may restrict the cash withdrawal limit on your credit card. You would not be able to withdraw cash with your card until the loan balance drops below the cash withdrawal threshold.

When customers apply for a credit card, not all banks offer the convenience of obtaining a loan against it. However, IDFC FIRST Bank stands out by facilitating a quick and hassle-free loan disbursal against your credit card. Experience the speed and efficiency of IDFC FIRST Bank and get access to funds within hours. Apply for a credit card with IDFC FIRST Bank today and unlock a world of financial possibilities. 

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.