A loan on credit card is pre-approved and therefore no extra documentation is required while availing it, unlike other loans which often have extensive documentation requirements. Interest charged on a loan on a credit card is often at par with that of a personal loan, while interest rate for cash withdrawal on credit card is much higher often over 36% annually. The loan amount is generally higher than the cash withdrawal limit on a credit card.
Some banks also provide a loan against other banks’ credit cards through balance transfers that are then repayable through EMIs. In this, you can transfer the outstanding balance on other credit cards to one credit card and pay a single EMI (debt consolidation).
A loan on credit card is usually not given to every customer who holds a credit card. It is only given to customers with a good credit card repayment track record. The loan amount is usually disbursed to the card holder through a demand draft or the loan amount is transferred directly to the bank account.