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Loan on credit card is a type of personal loan offered against your credit card. Being a quick and convenient method of borrowing, it can be very helpful in case of a financial emergency. However, the interest rate on loan against credit card is usually higher than that on a personal loan; processing fee and other charges are also applicable. So, before you opt for a loan on credit card, you must know its pros and cons.

Parameters Details
Eligibility Pre-approved customers are informed about their eligibility via SMS. Eligibility depends on the internal policies of the bank.
Documents Required No additional documents are needed
Loan Amount Eligible loan amount depends on your credit limit and other internal policies of the bank.
Loan Tenure Up to 60 months (may be higher in certain cases depending on the bank’s policies)
Interest Rate Varies from lender to lender; may also vary from customer to customer
Processing Fee 1.5% to 3% of the loan amount (based on the lender’s terms and conditions)
Loan Disbursal Time Within 24 hours if you have savings account in the same bank
5-7 business days (or higher) in case of NEFT or Demand Draft

Click here to see the loan against credit card terms and conditions for different banks.

How to Take a Loan on Credit Card?
Pros and Cons of Loan on Credit Card
Loan on Credit Card Vs. Personal Loan Vs. Cash Advance
Loan on Credit Card Options in India
Should You Take a Loan on Credit Card?

How to Take a Loan on Credit Card?

Usually, loan on credit card is offered on a pre-approval basis. Your card issuer will inform you through SMS or email when you become eligible for a loan on your credit card. The maximum amount of loan that you can avail will also be conveyed.

To apply for a loan against credit card:

  • Call the customer care department of your bank
  • Log in to your internet banking portal and apply online

If you have not received any such communication and still wish to apply for a loan against credit card, you may call the customer care department of your bank and request the same.

Pros and Cons of Loan on Credit Card

Pros Cons
  • Quick access to cash
  • One of the most convenient forms of borrowing
  • No additional documents required
  • Interest rate is higher than personal loan
  • Credit card limit may be blocked
  • Not all cardholders are eligible

Loan on Credit Card Vs. Personal Loan Vs. Cash Advance

Loan on credit card may look like a reasonable alternative to cash advances on credit cards but it is not very economical. The rate of interest, though varying from customer to customer, is typically higher than personal loans. This is why we do not recommend taking a credit card loan for discretionary expenses like shopping or vacation. Here is a comparative analysis between the three forms of borrowing to help you make a better decision.

Loan on  Credit Card Personal Loan Credit Card Cash Advance
Interest Rate 12% p.a. to 29% p.a.
(depending on the user’s profile)		 10.50% p.a. onwards
(depending on the borrower’s profile)		 35% p.a. to 45% p.a.
(depending on the card variant)
Processing Fee/One-time Usage Charge 1.5% to 3% of the loan amount Up to 5% of the loan amount 1.5% to 3% of the amount withdrawn
Processing Time A few hours for the same bank transactions;
5-7 working days in case of NEFT/DD		 5-7 working days Instant cash withdrawal from ATM
When to Choose When in need of instant cash and pre-approved offer available When in need of funds but would like to avail a lower rate of interest When in need of urgent cash and no other option is available

Loan on Credit Card Options in India

A majority of the Indian Credit Card Market is covered by 6 major card issuers namely HDFC Bank, SBI Card, Citibank, American Express, ICICI Bank and Axis Bank. So, here we will talk about loans on credit cards from 4 of these issuers.

Loan on Credit Cards from Top Banks- Summary

  HDFC Bank SBI Card ICICI Bank Axis Bank
Maximum Loan Amount Varies from user to user Varies from user to user Rs. 10 Lakh Varies from user to user
Interest Rate Communicated at the time of offer 12.7% – 29% p.a. Communicated at the time of offer 12.60% – 22.20% p.a.
Processing Fee Communicated at the time of offer 2% of the loan amount (Min.- Rs. 499; Max.- Rs. 3,000) Up to 2.25% of the loan amount (plus GST) 1.5% or Rs. 500 whichever is higher
Disbursal Time (same bank) Within 1 hour N/A Within a day N/A
Disbursal Time (NEFT/Demand Draft) N/A Within 48 working hours NEFT: 3-4 working days
DD: Up to 11 working days		 N/A
Loan Tenure Up to 60 months Up to 36 months Up to 60 months N/A

Since HDFC Bank offers two types of loans against credit cards, here are some more details to help you understand.

Loan on HDFC Credit Cards

HDFC Bank offers loan on credit cards in two ways- Insta Loan and Insta Jumbo Loan. Insta Loan is a pre-approved loan on credit card up to the limit available on your card whereas the loan amount in case of Insta Jumbo Loan can be over and above the limit. Differences between the two are shown in the table below:

Insta Loan Insta Jumbo Loan
Pre-approved Loan YES YES
Credit Limit Blocked YES NO
Maximum Loan Amount Within the Credit Limit Beyond the Credit Limit
Rate of Interest Varies from user to user Varies from user to user
Documentation None None

Click here to read more about HDFC Credit Card Loan

Should You Take a Loan on Credit Card?

Whether you should take a loan on your credit card or not depends on a lot of factors. Here are a few situations under which you can opt for a loan against credit card:

  • When you need a smaller loan immediately
  • When you are not eligible for a personal loan
  • When you cannot afford to wait for the personal loan application processing as it takes up to one week
  • When you are getting an attractive interest rate, lower than what you would get on a personal loan with other lenders
  • When you are confident about paying off the loan within a year

Suggested Read: How much would a Credit Card Cost You?

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