August 1, 2025 · 11 mins read
Credit cards are a small plastic tool that allows you to buy things without paying for them. However, a bill is generated at the end of the month, and you have to pay it within the due date. However, sometimes you may require an additional amount for some emergencies. In such cases, you can take a loan against a credit card. Taking a loan against a credit card is a very common phenomenon, and almost all banks offer such loans. Read to find out what a loan against a credit card means and how to take one.
A loan on a credit card is similar to a personal loan. It is an unsecured loan, doesn’t require any collateral, and has a fixed tenure. The maximum loan amount is limited to the credit limit on the card, and the interest rate is lower than the credit card interest rates. Once the loan is approved, you will receive it either through a demand draft or in your account.
The following are the features of a loan against a credit card
Unsecured loans: Credit card loans are personal and unsecured loans. You don't need collateral such as property or gold to apply for such loans.
Pre-approved: Most credit card loans are already pre-approved. Do not need any additional documentation till you are taking a loan within the credit card limit.
Repayment through EMI: You can repay credit card loans in equated monthly instalments (EMI). The EMIs are usually added to your credit card bill.
Limit on the loan amount: The maximum amount of loan you can avail is limited to the credit card limit. But some banks give a loan exceeding the credit card limit. However, it requires additional documentation and involves more procedures.
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Following are some of the essential benefits of a loan against a credit card:
1: Eligible users can avail of an instant loan on credit cards whenever required
2: These loans are usually pre-approved in nature, meaning they could be availed of with minimal to zero documentation
3: Credit card-linked loans are usually offered to select credit card users depending on the card variant, repayment history, credit score, income, and credit limit of the user.
4: These loans require no collateral and can be used for any financial requirement.
5: Credit card loans could be linked to the card's credit limit, and the EMIs are typically clubbed with the monthly card dues.
6: These loans typically have shorter tenures up to 24 months. However, there are banks that could offer longer tenures up to 5 years.
7: The interest rates are usually higher than personal loans and other secured loans, depending on the card variant.
8: The maximum loan option could be capped even if the credit limit is higher
9: Many credit card issuers might offer a discount on the loan processing charges
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If you need money for some unforeseen expense or emergency, go ahead and take a loan against your credit card. However, you can take a loan only if you are eligible.
The following are the eligibility criteria for taking a loan against a credit card.
1: Most banks offer credit card loans only if you are an existing customer. This means you have an account with them.
2: You must have a credit card to take a credit card loan.
3: A good credit history is a prerequisite. Banks often provide loans to customers with a good credit score.
4: If you fall under the high-income bracket, you will be eligible to top up your existing loans against your credit card. You will also be eligible for a higher loan amount in case you don’t have a credit card loan already.
You don't need any documents for applying for a credit card loan, as you would've submitted them already while applying for a credit card. Since it is a must to have a credit card to get a credit card loan, the following documents are required to apply for a credit card.
1: Passport size photographs
2: Identity proof such as PAN Card, Aadhar Card, voter ID, driving license, or passport
3: Address proof such as Aadhar Card, utility bills, or driving license
4: Payslips and office identity cards in case of employees
5: Self-employed professionals require income tax returns from the last three years
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The interest rate for a loan against a credit card varies between 12% and 20%. Since credit card loans are personal loans, their interest rate is slightly higher than that of car or home loans. The interest rate varies from bank to bank. Moreover, it also depends on your credit history and the type of credit card (silver, gold, or platinum). A good credit score or higher-grade card can fetch you lower interest rates.
HDFC Bank: HDFC Bank offers two types of credit card loans to its credit card customers – Insta Loans and Jumbo Loans. Insta Loans are linked to the card's credit limit, and the maximum loan amount is usually capped at 80% of the available credit limit balance. Jumbo Loans, on the other hand, are not linked to the card's credit limit and could be even more than the limit. However, both loans come with a tenure range of 12 months to 60 months, with current interest rates starting at 15% p.a. Eligible cardholders can get funds instantly through any of these loan facilities without any additional paperwork.
Standard Chartered Bank: Standard Chartered Bank offers a Loan on a Credit Card up to ₹10 lakh to its pre-approved credit card customers. The loans can be availed quickly, starting from 11.88% p.a., with tenures from 12 months to 60 months.
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Since such a credit option is unsecured and does not require any collateral, it is offered to selected cardholders. However, to be eligible to avail of a loan on credit cards, individuals need to fulfil the following conditions:
1: To avail of a loan on credit cards, it is essential to possess a credit card account that offers such a loan facility.
2: Applicants need to have a good credit score and repayment history.
3: Individuals with stable and high income can apply for such loans.
4: Both new and existing credit card customers can apply for such a loan. However, the credit card issuer would only give such a loan to select customers based on its own eligibility criteria.
5: Users must have a sufficient credit limit balance to accommodate a loan if it's linked to the card credit limit.
Loans on credit cards are usually pre-approved in nature. Hence, in order to get such a loan, here are the steps to follow:
Step 1: Check if you’re eligible for a loan from your credit card issuer
Step 2: If so, visit the official portal of your credit card issuing bank via netbanking or mobile application and go to the ‘credit cards’ section
Step 3: Once you’ve found the loan offer, select the loan amount and the tenure after reading the applicable terms and conditions
Step 4: Check for any additional documentation requirements. If so, please upload those documents or contact your bank's customer service.
Step 5: Click Apply after entering all the required details
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If you're in urgent need of cash, you may want to consider taking out a loan against your credit card, provided you're eligible. These could be availed of quickly with minimal documentation requirements. While doing so, ensure you minimize your loan amount as much as possible due to the high interest rates involved. For larger requirements, it might be a better idea to opt for a personal loan or a gold loan, which offer relatively lower rates.
That said, if your credit score is low, you might not be eligible for a credit card, and thus, a loan against a credit card.
1: To apply for a credit card loan, you do not have to file documents or give collateral.
2: The loan is a convenient way to access instant cash for emergencies.
3: The repayment can be made in easy EMIs, making it easy to plan your expenses well in advance.
4: The EMIs will be directly billed to your credit card.
5: Credit cards also offer cash withdrawals. However, they charge interest as high as 36%. The interest for a loan against a credit card is lower than for cash withdrawals.
6: Credit card loans offer flexible loan tenures.
7: Banks charge a very low processing fee for credit card loans.
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Loans are given only if you have a good credit score: You can get a credit card loan only if you have a good credit score. To maintain a good credit score, pay your EMIs and credit card bills on time.
Late payments can affect your chances of obtaining future loans: If you delay paying an installment, your chances of securing a future or top-up loan are significantly reduced. Banks often avoid lending to individuals who default on their payments.
Default in paying an EMI is considered a loan default: A loan default has a greater impact on your credit score than a credit card default. If you default on your loan payment, your credit score will decrease drastically.
You can choose a tenure of your choice: Banks allow their customers to choose the tenure of the loan payment within the maximum limit. The maximum tenure allowed is usually 24 months. You can choose any tenure within the 24-month limit.
Pre-closing a loan is an option: You can pre-close a credit card loan at any time without notifying the bank. However, the pre-closure charges will be applied per the bank's norms.
Check processing fees before you apply: To process your loan against a credit card, banks charge a small fee, known as a processing fee. A high processing fee will reduce the loan amount you get. Choose banks with low processing fees when applying for a credit card loan.
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Credit cards are a convenient way to access instant cash during emergencies. However, they are still in debt, and you still have to pay interest. Hence, always be emergency-ready by having an emergency fund that covers at least six months of your expenses. If your fund does not cover your emergency, go for a credit card loan. This way, you are reducing your total debt.
Yes, there is definitely a difference between interest levied on cards and loans against credit cards. Typically, financial institutions charge a higher interest rate on cash withdrawals from credit cards than on loans made against credit cards.
A credit limit denotes the maximum amount that can be spent using a card. The concerned financial institution determines the credit limit for the cardholder by considering details such as annual income, repayment capacity, and credit history. Additionally, the concerned lender revises the credit limit based on the previous year's record, spending capacity, and repayment history.
Certain factors affect the eligibility for such credit options:
1: Poor credit score and repayment history
2: Insufficient financial standing and lower income level
3: Providing inauthentic documents
4: Existing liabilities
5: Age and work experience
According to experts, availing a loan on a credit card is effective for short-term debt. Moreover, since it is a kind of pre-approved loan extended based on credit card usage, credit score, and history, it is a prompt and convenient borrowing method. Moreover, it can be considered a viable option to meet financial emergencies.
Individuals can avoid paying interest on credit card purchases by paying the overall balance in each billing cycle. Therefore, one needs to restrict their spending capacity every month to continue to enjoy the benefits of the card without paying substantial interest charges.
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