Key things to know about availing a loan on credit card

From bridging the gap between expenses and income to paying urgent medical bills, plastic money makes life a lot easier. In addition to bearing all kinds of expenses, it also reduces many of them in the way of rewards that let one avail discounts and cashback offers.

The list of benefits gets longer when you consider how credit cards help you build your credit score. That’s especially important because your credit score determines whether or not you get approved for a loan – education, home and car – and on what terms.

While that in itself is a solid list of benefits, credit cards go a step beyond and offer the facility of availing a loan against them.

A loan on credit card is not as well-known to people as other kinds of conventional loans. A credit card loan reduces the inconvenience of approval, processing and disbursal time of funds tremendously.

Here are the key things to know about a loan on credit cards:

Unsecured loan

A loan on credit card is an unsecured loan, requiring no collateral or guarantee. It’s quite similar to a personal loan on that count, however, it’s quicker and easier to avail because unlike a personal loan, there’s no need for documentation or a waiting period for approval.

Easy access to cash

A credit card loan is by far the quickest way one can raise funds. If you find yourself in an emergency situation requiring quick cash, don’t think twice about which option to avail. Unlike other loans, there’s no need to wait for a few days for approval because there’s instant approval on loans on credit cards.

You can apply for it from anywhere, at any time by either making a call or by going online. Such quick and easy access to cash will help immensely in sticky situations.

Maximum amount

The amount of the loan you can avail on a credit card depends upon the credit limit you have on the credit card.

The maximum amount that can be taken as a loan on credit card at one go, including the interest, has to be within the credit limit of the card. 

Interest rate

The interest rate charged on loans on credit card is usually lower than the interest rate charged on cash withdrawals on the card.

Hence, a credit card loan is a more economical option of availing emergency cash than opting for cash withdrawals.

Tenor and repayment

Most lenders allow you to have a flexible tenor for a loan on credit card. The repayment is by the way of regular installments including a part of the principal as well as interest.

Lenders like Bajaj Finserv offer an instant interest-free loan for up to 90 days with the RBL Bank credit card. This option allows you to convert your credit card’s cash limit into a loan that can be repaid in 3 easy EMIs. The customer is charged only a flat 2.5% fee on this facility.

In addition to availing easy loans, this credit card offers many other innovative and industry-first features like the benefit of 4 cards rolled into 1 – credit card, cash card, loan card and EMI card – to provide you the utmost convenience and ease.

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