A credit card loan is an excellent unsecured borrowing option to manage cash flow for all financial needs. While this borrowing option works like a traditional loan, there are many key differences that make it a better choice when you need funds quickly.
Knowing the full extent of its benefits, application process, and other details is crucial for an informed decision and swift access to funds. Here is a quick overview of a credit card loan.
How Does a Credit Card Loan Work?
These are pre-approved loans that you can avail against your credit card, with minimal documentation and no collateral. You can take only a part or complete credit limit as a loan for your preferred tenure. This loan works similar to a personal loan, as you can use it for any reason.
Who Can Apply
While it doesn’t have stringent eligibility criteria, not everyone can apply for a credit card loan. Here are a few requirements you need to meet when opting for a loan against your credit card:
- You can get a loan if you have sufficient credit limit available
- You can get approval if you have an excellent credit score
- Maintaining good credit repayment behaviour and no history of default is essential
- You should have a steady source of income
- Only primary cardholders can apply for a loan against a credit card
Note that your issuer may have additional criteria. So, visit their website and confirm all the details before you apply for a loan.
How Quickly Can You Get It?
Since issuers offer this loan to existing customers without lengthy paperwork, you can get this loan quickly. To apply, the first step is to check your remaining credit limit. If you have credit available, you can apply via net banking or mobile banking app in just a few minutes.
Once you submit the application and the required documents, wait for the issuer to approve your request. After approval, you will get the funds credited to your account.
How Do You Repay It?
Like a traditional loan, you repay the loan amount and interest in multiple monthly instalments. You can check the EMI amount along with your other credit card dues in your billing cycle. Choose any suitable tenure option which fits your budget and pay your EMIs effortlessly.
How is it Better Than Traditional Loans
Here are some reasons to opt for this loan instead of other types of loan.
- You can apply for a credit card loan anytime without a lengthy application process.
- It does not require any collateral, as your credit card acts as a security.
- The approval time is quicker, as the issuer already has access to all your details.
- As you repay your loan, your credit card limit gets restored.
How to Manage It
Now that you have a better understanding of how a loan against a credit card works, note these tips before applying.
- Check your credit limit to ensure that you are eligible to apply
- Borrow the amount you require to avoid paying interest on the excess loan amount
- Choose a longer tenure to lower your EMIs to manage hassle-free repayment
- Opt for a loan against a credit card only if you cannot find other cost-effective alternatives
- Avoid missing out on EMI payments so that your credit score doesn’t get affected
- Review your credit card statement periodically to ensure timely repayment
- Create a budget to prioritise loan repayment by restricting unnecessary expenses until you have closed your loan
- If you have any additional funds available, use them to make a part payment or foreclose your loan to avoid paying high interest
With financial planning and disciplined repayment, you can enjoy your credit card loan without stress. While the majority of issuers give you this option, your eligibility plays a vital role in your approval.
However, with One Credit Card’s simplified eligibility criteria, you may have a better chance of getting approval. You only need a One Credit Card and have a good credit score. That’s all! If you meet the criteria, you can go to the One Credit Card app and apply for a loan up to your credit limit.
If you have any credit limit remaining on your card, continue spending it to earn 5X reward points on your top two purchase categories. You can manage your credit card transactions and your loan on the app. To enjoy a hassle-free borrowing experience with a lifetime-free credit card, apply online.
