A loan against a credit card is a type of personal loan that is secured by your credit card. This means that the lender will use your credit card as collateral for the loan.
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New Delhi: Taking a loan against a credit card can be a quick and easy way to get access to money when you need it or at a time of emergency. Many credit card issuers in India offer this facility, which can be a more convenient and less paperwork-intensive option than a traditional personal loan. In this article, we will discuss the process of taking a loan against a credit card in India, the benefits of this type of loan, and some important considerations to keep in mind.
What’s Loan Against Your Credit Card
Your credit card can be used as collateral for certain personal loans. This indicates that the creditor will use the credit card’s collateral to secure the loan. The lender has the authority to sell your credit card to recoup their losses in the case of a default on the loan.
Credit card loans with collateral frequently have lower interest rates than personal loans with other types of collateral, such payday or title loans. This is done to lessen the risk to the lender, who has the right to seize your credit card if you don’t pay back the loan.
Eligibility for Loans on Credit Card
For unsecured credit card loans, a collateral deposit is not frequently necessary. As a result, only a small number of cardholders can access the loan.
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Issuers have stringent qualifications that must be met in order for a loan to be approved on a credit card. The cardholder should have a commendable credit history and a good purchase and repayment pattern to be able to apply for a loan on credit card, as per Bank Bazaar.com.
Quantum of Loan
The amiunt of loan that you can receive on your credit card depends on the credit limit of your card. Some issuers also offer loan over and above the credit limit where the availed loan amount will not be blocked against the credit limit.
Steps To Take Loan Against Credit Card
Check to see if your credit card provider offers credit card-backed loans. You can find this information on the credit card company’s website or by calling their customer service.
It is important to read and comprehend all of the loan’s terms and conditions, including the interest rate, processing fees, payback schedule, and any other expenditures.
Make sure that the loan amount is within your available credit limit. If you have a significant outstanding balance on your credit card, it may affect the loan amount available to you.
Now, you can apply for the loan through online means or by reaching out to your credit card provide. You will need to provide some personal information, such as your name, address, and income.
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Once your application is approved, the loan amount will be deposited into your bank account. You will then start making monthly payments on the loan, including interest and fees.
