There is no denying the fact that credit cards have become one of the vital financial tools in today’s time. It helps you pay for large expenses, pay in EMIs, and even pay after 40-50 days after making the transaction. Also, if you don’t have any fund in your savings account, you can use a credit card to manage everything.
A credit card gives you many advantages, and one of them is the loan facility on it. Yes, many times you have received a message, email or call from a bank with which you had taken the credit card to avail the credit card loan offer. You may have taken this as the cash withdrawal facility which it is not. Hence, here is a post to help you understand the loan on credit card phenomenon.
What is a credit card loan?
Loan on credit card is similar to that of personal loans, but it comes pre-approved. You also don’t need any documentation to get this loan. It is because the loan is given against your credit card.
Even though a personal loan is one of the quickest modes of raising urgent funds, you still need to offer some documentation. Hence, it may some time to get the loan amount disbursed.
On the other hand, in case of the credit card loan, you don’t need any documentation, and it is the fastest way to get unsecured finance. You can use the loan amount to fund all urgent and needs as per your choice.
The interest on credit cards will be the same or some points higher than that of a personal loan. The interest on cash withdrawal using a credit card is the highest, and hence, if anyone needs money, a loan on credit card is a handy option.
You can make the repayment back to your bank in EMIs over a tenor ranging between 6 months and 24 months. It means that you don’t need to stress the payment and make it taxing on other expenses in the month.
After the credit card statement is generated, the loan amount will be added in your billing cycle, and you will need to pay in EMIs over a tenor as availed.
The final rate of interest on the loan on credit card would also depend on the type of credit card that you have availed. Hence, you should maintain a robust Credit Score and repayment history as your bank will consider these factors.
When should you avail the credit card loan facility?
The loan on credit card facility may come handy to people who are facing some urgent needs for money. It is also when the cash withdrawal limit can’t meet your needs. At the spur of the moment, a credit card cash withdrawal from an ATM may seem beneficial in the end, but it may come at a higher rate of interest.
As a result, it does make sense to opt for a credit card loan when compared with the cash withdrawal facility as the rate of interest is lower. Also, since the loan is already pre-approved, you get the disbursement instantly to start working on the needs. Banks and other lenders either issue a demand draft or do a direct transfer to your savings account.
Many lenders these days don’t charge any interest on cash withdrawal using a credit card from an ATM. Bajaj Finserv RBK Bank SuperCard is one such facility that can let you enjoy interest-free withdrawal from ATMs for 90 days. You only need to pay a flat 2.5% processing fee to enjoy the facility.
Can everyone with a credit card get this facility?
No! You should note that credit card issuing companies and banks offer the credit card loan facility only when you have a robust CIBIL Score and repayment record.
If you have managed to pay the credit card bill after the credit card statement is generated, then you may find the offer coming to you. Sometimes, your increased income level can also help you get such loans or even a top-up loan.
Should you go for it?
Credit card loan is an unsecured loan, and hence, the applicable rate of interest will be higher than a secured loan. If you want an unsecured loan, you may consider availing the loan on credit card. Since the loan is already pre-approved, you can get it immediately to start funding your multiple needs.
If you are still not convinced about the idea of the loan on credit card, you may get in touch with a known financial expert to help you out.
Bajaj Finserv comes with pre-approved offers on credit cards, EMI finance, home loans, personal loans and more. It is to make the loan processing faster and hassle-free.
You can share some of your basic details like your name and mobile number to explore your pre-approved loan offers today.
Gaurav Khanna is an experienced financial advisor, digital marketer, and writer who is well known for his ability to predict market trends. You can find Gaurav on Linkedin.