5 Things You Need to Know About a Personal Loan on Credit Card
The number of individuals applying for credit cards has increased significantly. Those that had one credit card are now applying for their second, third or fourth card! Seeing this, banks & lenders have started offering attractive features, benefits & rewards on this plastic form of money. One of these features is the personal loan on credit card, a.k.a, loan against the credit card. This article will tell you all you need to know these finance solutions so you can make an informed decision the next time you have a monetary gap to fill.
What is a personal loan credit card?
These loans are also known as loans against credit card and are finance solutions provided basis your credit card limit. They are unsecured in nature quite like traditional personal loans only your eligibility amount is decided by the credit limit of your card rather than your credit score, monthly expenses, income, etc.
How much can I get with such loans?
Generally speaking, one should expect loan amounts between 40 and 80 percent of your credit card limit. Now, this can depend on the type of credit card you have. Personal loan on credit card amounts can be smaller for basic cards but can be higher for platinum and other high-level cards. Some lenders will offer up to 10 lakhs with such loans.
What is the process?
In comparison to a traditional personal loan, these loans are quite easy to procure. One must simply approach their branch and put in a request. Many lenders have mobile apps or websites from where customers can get such loans with just a couple of clicks and taps. Either way, it is much easier and straight forward in comparison to the usual personal loan process. It is also much faster as the lender will have your details and has a pre-approved credit limit in place.
What about the interest rate?
Well, interest rates differ from lender to lender. But generally speaking, the rates are applied on a monthly basis & are generally in the 2 to 3.5 percent range. However, you must check the APR to get a better idea. Note that you should always make the payments as required; failing to do so could invite high penalty rates and send your repayment spiraling out of control. Lenders will also levy a transaction fee of around 2 to 3.5 percent of the loan amount borrowed.
Considering that a personal loan on credit card entails relatively small loan amounts, the tenures usually range between 12 and 36 months. Some of the better lenders are known to offer as much as 60 months to repay the amount, thereby making it extremely easy to handle to the installments.
Taking a personal loan on credit card is indeed a good move for smaller financial gaps. However, ensure that you make the payments on time to ensure that loan doesn’t cost you more than it should. We hope the information mentioned in this article has given you a good idea of this financial solution.
Good luck and all the best!