Some financial institutions allow their customers to avail a loan against their existing credit card. While these loans are extended for a short tenor, they have no end-use restriction. Another major advantage of these loans is that they do not require any additional documents. This makes the approval and disbursal of these loans very prompt.
Loan against credit cards can be an effective financing option in emergencies, owing to its fast approval and disbursal. The loan amount can be used for any purpose making it a very viable option during medical emergencies or accidents. Furthermore, these loans are unsecured and therefore do not require any collateral. Users of credit cards should also note the eligibility criteria and the application method for these loans so that they can avail them easily.
Be it a Bajaj Finserv RBL Bank SuperCard or any other, the loan schemes offered on them have specific eligibility requirements which are discussed below in detail.
- Typically only existing users of credit cards can apply for these loans against their credit card accounts.
- Credit history and score is often checked by financial institutions before approving these loans.
- The loan amount depends on the income of an individual.
In case an individual requires a higher sum in their loan against credit cards, users can upgrade their credit cards to a higher variant, depending on their credit score and income amount. Conventionally, issuers of these cards do not require any additional documentation for these loans.
Application Method For Loans Against Credit Cards
The procedure for the application of these loans is quite easy since an applicant’s credentials are already recorded on the database of their financial institution. Just as the numerous reasons why a credit card application can be rejected, financial institutions can also reject a loan due to lack of eligibility or faulty application. The process is explained below in detail.
- Cardholders should visit the official website of their financial institution and log in to their credit accounts.
- After selecting the loan against the credit card option, applicants must fill in the requisite application form. While personal and address details are already uploaded, users should provide information on the loan amount they wish to avail.
- After checking their loan eligibility with an online calculator, customers should submit their form.
- Once the financial institution approves this loan application against a credit card, the loan amount is disbursed to the financial account of the applicant.
While every credit card user is always advised to keep their card details including CVV code undisclosed to anyone, they have to provide these details while applying for such a loan.
Much like the application for these loans, the application process for credit cards is also quite easy. Bajaj Finserv makes it even easier with pre-approved offers on credit cards which make the application procedure much convenient for users.
Things To Keep In Mind
There are quite a few nuances which must be kept in mind while applying for a loan against a credit card. Like the numerous reasons to opt for a personal loan on credit cards, customers should keep the following things in mind too.
- If a borrower defaults on this loan, it is considered as defaulting a loan and not defaulting on a credit card.
- Late payments immensely affect these applications since financial institutions consider lending such applicants more risky.
- The interest rates on these loans are not the same as those of usual loans.
To avail a loan of a considerable amount or to make higher spending, tips to increase credit card limit are crucial. Users should look up these tips so that they have the option for higher financing at hand. Additionally, they should also keep their card number and CVV code safe since higher credit limit leads to a higher risk of loss if there is an incident of fraud.