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Is it worth taking a loan on credit card?
Posted on Wednesday, July 20th, 2022 | By IndusInd Bank
Today, most credit cards provide you the option of availing a quick loan against your credit limit. These are great for emergency situations where you need a quick inflow of cash. Whether it is a medical emergency or a small education loan, you can rely on a credit card loan to get the funds that you require quickly. But is it worth taking a credit card loan? This blog highlights a few points that you should consider before availing one.
What is a loan against credit card?
A loan against credit card, just like a personal loan, is an unsecured loan that comes with a fixed interest rate over a set tenure. These loans are usually processed very quickly and you can get a credit card loan approved sometimes, in minutes. This makes these loans great for immediate cash requirements.
The maximum amount of credit card loan that you can apply for depends on the credit limit set on your credit card. As soon as a loan is disbursed to your account, your available credit limit is reduced by the amount of the loan taken.
The repayment of your credit card loan happens, just like any other loan, in monthly installments. The amount of these monthly installments depends on the amount of loan taken, the interest rate on the loan, and the tenure selected at the time of availing the loan.
Is it worth taking a loan on credit card?
Whether taking a loan against credit card is worth it or not depends entirely on factors such as your current situation, how quickly do you need the cash, how much cash do you need, etc.
Here are a few points that you should consider when deciding whether you should go for a credit card loan or not.
How much loan is required?
The maximum amount of credit card loan that you can avail depends on your credit limit. If the amount of loan that you require is within your credit limit, you can avail a credit card loan. If not, maybe you should explore other options like a personal loan or a mix of personal loan and credit card loan.
Interest rate
This is a very important factor that you must consider before availing a credit card loan. Since the interest rates on credit card loans can be higher than those on personal loans, you will need to consider whether it is worth paying that extra interest. So, before you opt for a credit card loan, do consider whether you can avail a personal loan for the same amount at a lower interest rate. If you can, then definitely go for the personal loan.
How urgent is your cash requirement?
In case of an urgent cash requirement, it may be worth getting a credit card loan. You can apply for one in a flash using your bank’s mobile app. Simply select the amount of loan that you want to avail and the tenure and you should be able to get the money in your account in no time.
Bottom Line
So, credit card loans are a great way to have an immediate cash inflow for emergencies. Make sure to consider all these points to decide whether it is worth for you to take a credit card loan or not.
If you are looking for a credit card that gives you the option of availing a credit card loan with a host of other features such as unparalleled rewards and cash back program and lower interest rates, do check out IndusInd Bank Credit Cards right here.
Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.
