Personal Loans on Credit Cards: Everything You Need to Know

Sometimes, unexpected expenses arise, and that’s when a loan on your credit card can come in handy. In such loans, the funds are disbursed instantly to your account by your credit card issuer. This is an excellent feature that adds to the convenience offered by the best credit cards.

If you have a good credit score and a solid repayment history, getting this loan is quick and easy. Before applying for a personal loan on a credit card, make sure you understand the following:

• How it works
• Who is eligible
• What the application process entails
• Why it could be a smart choice
  

What are Personal Loans on Credit Cards?

Credit card personal loans are pre-approved personal loans from your credit card company. In contrast to regular personal loans with paperwork and waiting time for approval, these are hassle-free and fast because the bank already knows your credit history.

Features and Benefits of Loans on Credit Cards

Credit card loans offer quick access to funds when you need them the most. Here are some of their key features and benefits: 

• Instant approval: Since the loan is pre-approved, there’s no waiting time
• No additional paperwork: You don’t need to submit any extra documents
• Fast disbursement: The money is deposited in your bank account instantly
• Stable interest rate: Obtain a fixed interest rate throughout the duration of the loan
• Affordable repayment options: Select a payment term that is most convenient to you
• Unchanged credit limit: Your regular credit card spending limit remains unchanged
  

How Credit Card Loans Work

Loans against credit cards are easy to access and require minimal paperwork. Here’s how they work:

• Application: You can apply directly through your bank or credit card issuer
• Loan amount: The approved amount is based on your available credit limit or cash advance limit
• Disbursement: Once approved, the funds are either transferred to your bank account or provided in cash
• Interest rates: These loans usually carry higher interest rates than regular credit card purchases
• Charges: Interest is typically calculated as a percentage of the loan amount withdrawn
  

Interest Rates and Fees of Credit Card Loans

The interest you pay on a credit card loan varies with your credit score and repayment history. In addition to interest, be mindful of other possible charges:

• Processing Fee: A one-time fee is collected at the time your loan is processed
• Prepayment Penalty: A small fee is charged if you decide to pay off the loan earlier than the tenure period
• Late Payment Fee: Extra cost if you delay paying an EMI
  

Eligibility Criteria to Qualify for a Loan on Credit Cards

To get a loan against your credit card, you need to meet the following criteria:

How to Apply for a Loan on Credit Cards

As these loans are typically pre-approved, applying is easy and fast. Your EMIs will be included in your monthly credit card bill, so pay on time to steer clear of late charges and extra interest on pending amounts. Follow these step-by-step instructions to apply for a loan on your credit card:

• Check Your Eligibility
  Log in to your net banking or mobile banking app to see if you’re eligible. You can also contact customer care for confirmation.

• Apply via Net Banking or App
  Go to the credit card section and look for the “Loan on Credit Card” or “Instant Loan” option. Most banks offer a simple online application process.

• Choose the Loan Amount & Tenure
  View your eligible loan amount, then select the amount you need and a repayment tenure—typically between 3 to 60 months.

• Confirm and Accept the Offer
  Review the loan details, including the interest rate and EMI. Once you accept the terms, the loan amount is instantly credited to your savings account.

Things to Consider Before Taking a Loan on Credit Cards

You should only borrow as much as you really need and are sure that you can repay in time to prevent late fees, increased interest, and harm to your credit score. Prior to applying for a loan via your credit card, consider these key points:

• Higher Interest Rates
  Credit card loans often come with higher interest rates, which can increase your overall repayment burden
• Impact on Credit Limit
  The loan amount is usually deducted from your existing credit limit, reducing the available balance for regular card use
• Credit Utilisation
  A high credit utilisation ratio after taking the loan can negatively affect your credit score, making future borrowing more difficult
• Risk of Debt Accumulation
  Continuing to spend on your credit card while repaying a loan can make you fall into a debt trap

A personal loan on a credit card is an intelligent way to get instant funds. It has options such as instant disbursal and flexible tenures, making it the best choice for short-term needs.

With the One Credit Card, you can take advantage of its instant loan feature, OneCash, allowing you to borrow against your available credit limit seamlessly. This lifetime-free credit card comes with no hidden fees and transparent charges.

It also offers 5X rewards on your top two spending categories, and you can easily manage both your card and loan through the OneCard App. With fast disbursal, it’s the perfect choice for those who value speed, simplicity, and efficiency. Apply today and make one of the best credit cards in India a part of your wallet!