Things to Know Before Taking a Loan Against Credit Card

Taking a loan against your credit card is an excellent way to meet sudden fund requirements. Being an unsecured loan with virtually no paperwork involved, loans on credit cards involve a pre-approved loan amount above your credit limit and are a quick borrowing alternative available to credit card holders. If you are planning on taking a loan against your credit card, you must keep certain things in mind before taking the plunge. Keep scrolling to find out.

Things to Consider Before Taking a Loan Against Your Credit Card 1. Default on Payments Failing to make timely repayments on your credit card loan is the same as defaulting on credit card bills. Any default in payment directly affects your CIBIL score. And this can, in turn, influence your chances of securing any future loans. So, make sure to apply for an affordable loan amount, and tenure is manageable.

2. Top-up Loan Facility It is a facility offered over and above the existing loan against your credit card. So, you don't have to wait to pay back your current loan before securing another. However, securing a top-up loan is highly dependent on your credit history. Making timely payments will keep your credit score healthy and make you a suitable candidate for a top-up loan during any financial emergency.

3. Flexible Loan Amount and Tenure You can avail loans against credit cards on the unutilised limit of your credit card. In many cases, you can obtain an affordable loan starting at Rs. 5000. What's more, banks allow you the freedom to choose a convenient loan tenure depending upon your needs and affordability. 4. Look Out for Additional Charges Banks levy a processing fee while granting a loan on a credit card

which may vary from bank to bank. While most banks charge a nominal processing fee, your loan might also carry certain hidden charges that might add up to the cost of your loan. So you must enquire about such charges with your bank beforehand and read all documents thoroughly to prevent future problems. 5. Rate of Interest Before applying for a loan on a credit card, check out the interest rates offered by your issuing bank. In most cases, the interest rate on loans against credit cards is usually higher than on personal loans, and a high interest rate equals higher EMIs. So, it is best to determine your affordability when looking for a credit card loan. It is recommended you choose a

loan on a credit card only during emergencies, when other loans may take longer to be granted or when the interest rate suits you. To Sum Up In cases of emergency, a loan on a credit card is one of the best solutions out there. Where personal loans can prove to be a tedious process, these loans are quick and easy to secure. But, taking a loan against a credit card can also be a slippery slope. Because of how easy it is to secure one, it could lead to impulsive loan taking, which is dangerous. Exercising financial discipline is recommended for those taking a loan on a credit card.