Credit Card Loan: Credit Card Loan is such a pre-upward financial product. In this, cardholders can use a part of their existing credit limit as a personal loan. To take this loan usually no new documentation or long approval process is required. This facility is provided on the basis of cardholder’s credit history, repayment capacity and strength of credit profiles.
What is a credit card loan?
It is an unsecured loan, which is associated with the available credit limit of the card. In this, instead of physical purchase, the fixed amount is transferred to the bank account of the card holder. This money is debuted with a credit limit and returned as monthly installments in the scheduled deadline.
However, its interest rates are usually higher than a personal loan and it begins to impose interest immediately, without any interest-free period.
How does this work?
Credit card issuing companies offer loan offers to eligible customers according to their internal eligibility standard. The loan amount is transferred to the customer’s account in a few hours or days. The duration of the repayment can be up to a maximum of 60 months, while the processing fees are usually up to 1-2%.
What are the things to keep in mind before taking a credit card loan?
Such loans give easy and immediate funding. However, it also includes risk. If not paid on time, it can cause serious damage to the credit score. In such a situation, it is important to take some precautions.
The most important thing is that you should use such an amount for important tasks. For example, for expenses like education, insurance or medical. Do not use this holiday or expensive gadgets.
Growing default cases on small loans
Credit Card Loan is a fast and easy solutions, but its conditions are necessary to understand carefully. Given the increasing NPA and default, regulatory agencies have already warned about unsafe borrowings. So before taking a loan, compare other options and only borrow as much as needed.