I have a credit card and I’m considering taking a loan against it. Is it possible to get a loan on my credit card? If yes, what is the eligibility criteria and procedure to apply for it? Also, how is the loan amount determined, does it depend on my credit limit, usage, or credit score?
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Yes, you can get a loan against your credit card.
It’s basically a pre-approved loan that your bank offers based on your credit card usage, repayment history, and credit score. The loan amount is usually a part of your credit card limit or sometimes given as an extra amount over your existing limit (depends on the bank’s offer).
This loan is usually offered to selected customers based on:
A good repayment track record on your credit card.
Credit score, spending behavior, and income profile.
The process of applying for the loan is simple:
- First, check if you have an offer in your mobile banking app or netbanking.
- Go to the credit card section → look for offers like “Loan against Credit Card” or “Encash Offer”.
- If there is such option, that means you have a pre-approved offer.
- So, Review the loan amount, interest rate, and tenure.
- Choose the amount (usually up to your eligible limit).
And If the EMIs, interest, and processing fee look okay to you then only go ahead and confirm by entering your bank details.
The money will be credited to your bank account, and the equivalent amount will be blocked from your credit card limit.
So, you must be thinking then what’s the benefit?
Even though your credit limit gets blocked, the interest rate is lower than regular credit card interest. It’s a good option if you want a quick loan without paperwork.
But here’s my honest suggestion -
Only take this loan if you genuinely need it and are comfortable with the EMIs. While it’s cheaper than credit card interest, it can still be higher than personal loan rates in some cases.
So, always compare before applying.
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