Credit cards have revolutionized personal finance. Before credit cards, people had to rely on cash or debit cards for purchases. These days, credit cards are widely accepted and allow customers to make payments automatically from their bank account or pay interest-free until the credit limit is met. One of the most common uses of credit cards is for loans. Banks offer credit card holders loans that they can take out against the credit limit on their card. The amount of loan a cardholder can take depends on his or her credit history and repayment history with banks. In this blog, we’ll tell you everything you need to know about loans on credit cards, eligibility criteria, benefits, and how you can compare loan options from different banks.
What are Loans on Credit Cards?
Loans on credit cards are a service offered by banks, like ICICI Bank, which provide loans to select credit card customers based on their spending and payment history. In terms of interest rates, credit cards generally offer interest rates that are higher than personal loan interest rates. However, when comparing the two credit products, personal loan interest rates are often lower than credit card interest rates.
The main difference between personal loan interest rates and credit card interest rates is in terms of repayment tenure. With personal loan interest rates, you can repay the loan in cash or over time through various repayment methods such as monthly installments or grace periods. You can also opt for a term loan where you repay it in a set period of time.
But with credit card interest rates, too, there are various repayment options available to you. But the key difference is that with personal loans, interest doesn’t accrue while with credit cards, interest can be accumulated in different ways such as statement cycle grace periods.
Both personal loan interest rates and credit card interest rates have their own merits and demerits and should be analyzed carefully before making a decision.
Top Banks Offering Loans on Credit Cards
Banks offer the facility of loans on credit cards, with some of the top banks in the country providing them. Personal loans can have lower interest rates than credit cards and are paid in one lump sum.
Creditors evaluate a borrower’s credit score before granting a loan. The amount of loan is decided by the rate of interest charged for personal loans. A credit card provides revolving credit with access to funds and may have higher interest rates than personal loans.
Interest rates and credit scores are key factors influencing approvals and terms for both personal loans and credit cards. Banks assess loan eligibility based on a borrower’s income, assets and finances.
If you want to apply for a loan on a bank card, it is important to understand the lending criteria and eligibility criteria that apply to you and your financial situation, so you can make an informed decision.
Eligibility Criteria for Loans on Credit Cards
If you are looking in for a loan on credit cards, there are certain eligibility criteria that you must follow. Most credit card loans are unsecured and do not require any collateral for the loan. The eligibility criteria of credit card loans varies depending on the bank offering the loan. Thus, customers must have a good credit history and a purchase/repayment pattern that is consistent with their credit score to qualify for loans on credit cards. Valid and active credit cards, long credit history, and a high credit score are popular eligibility criteria for availing loans on credit cards as these factors help the bank assess Customers’ financial health and security.
So, if you want to avail a loan on a credit card, you need to consider your eligibility criteria thoroughly and make an informed decision. Besides, having a high credit score is essential for getting card loans as this will help banks predict Customers’ repayment ability better.
Benefits of Loans on Credit Cards
Loans against credit cards are a way to take out quick and easy financing. They offer borrowers the flexibility of a credit card but with the security of a loan. In addition to offering a low interest rate, personal loans provide a lump sum amount that can be used for any purpose, such as traveling or restoring an old car. Borrowers may also benefit from a lower interest rate than credit cards, depending on their credit score and other financial factors. However, personal loans do not come without additional paperwork requirements. Additionally, credit card loans typically require borrowers to make regular payments in order to avoid interest charges.
Both types of loans are beneficial for different reasons, but both should be carefully considered based on individual needs and circumstances.
Compare Loan Options from Different Banks
– Loan options vary in terms of interest rates, loan tenure, EMI, and loan amount.
– When it comes to loan amount, credit card loans are the most popular option as they offer attractive rates and terms. On the other hand, personal loans are ideal for those with a high credit score as they provide flexible repayment options. Indeterminate loans are also an option for those looking to obtain a loan for a specific amount of money. The interest rates on these loans vary according to the tenure of the loan.
– For interest rates, credit card loans have the highest rate of interest among the loan options discussed above. Personal loans and Indeterminate Loans have lower interest rates than credit card loans. This can be due to the time period required to pay back the principal amount of the loan in case of personal loans or because there is no EMI limit in case of Indeterminate Loans
– When it comes to eligibility criteria, bank loan offers come with strict eligibility criteria such as being employed or owning immovable property. However, credit card loans are available to all without any stringent conditions. Similarly, loan tenure differs for each loan option available; banks offer longer term loans for housing finance and vehicles while credit card companies offer shorter duration loans.
Loans on credit cards are a blessing in disguise. They give you the flexibility of borrowing from credit card companies and making regular credit card payments without compromising on your lifestyle. So, next time you’re in need of funds, think of credit card loans! The amount you can borrow depends on your credit history and bank loan eligibility factors, but there are credit card loan comparison websites that help you compare loan offers from multiple banks to get the best deal for yourself. Remember this is an option for bad credit card debt problems and personal loans for bad credit card repayment plans. Happy reading!