Anyone with a Credit Card would be familiar with the constant messaging that comes their way, letting them know that a pre-approved loan is theirs for the taking!
How does this work?
If you have a credit card, you can apply for a loan against it, one you can get instantly. There is no documentation required as the Bank already has your information and there is no need to furnish any proof. There is also very little or no processing time or waiting period because the loan is pre-approved.
This is actually the best option out there for people who urgently need cash. People take these loans on their credit cards for several reasons –
How is the loan amount fixed?
The loan amount that a person can get on a Credit Card get on a Credit Card depends on the credit limit on his or her card. This in turn is influenced by a number of factors. The person’s income, for instance. After the bank carefully studies the income of a person, a credit limit is fixed. This limit is further reviewed periodically basis the repayments on time, payments made in full and no defaults at any time.
So based on a person’s history of using his or her Credit Card and the way payments have been managed over the years, a loan amount is fixed.
How to apply for a loan against a Credit Card
The process is very easy. You can apply for a loan by going to the appropriate section in the Bank’s website and applying for this loan, through phone banking or mobile banking, or you can walk into a Branch and request for a loan.
Advantages of a loan on a Credit Card
How to ensure that you can get a loan when you want it against your Credit Card
Never make any late credit card payments, as this can affect your credit standing and go on to influence your eligibility to get a loan on your credit card.
Is it wise to take a loan on your credit card?
If it is an instant fund you need to avail for medical expenses, educational purposes or others and you are fully able to repay it quickly and fully, then a loan is a good idea. However, if financially, you are already stretched thin and are looking for a loan to make things easier, you might have to later struggle to pay back the loan. It always is better to live within your means. And while a loan might appear to be a very attractive proposition, if repayment is not done in a timely manner, interest piles up very quickly and this can snowball into a nightmare.
So, as in everything in life – be wise and prudent.