Real Benefits of Using Your Credit Card to Obtain a Quick Loan
Are you looking for a quick and easy way to get some cash? If you use a credit card, you can take a loan against it. Some lenders offer this facility to their credit card users, offering a loan against a credit card which allows their users to borrow money using their available credit as collateral. You can also earn rewards if you choose the best credit card for reward points.
A OneCard metal credit card is a convenient option for accessing instant funds. It is also among the best credit cards for reward points that users can consider.
Let’s consider what it means to borrow money against your credit card.
What Is A Loan Against a Credit Card?
A loan against a credit card is a pre-approved loan offered by credit card companies to their customers. This loan is offered based on the available credit limit on their credit card. Users can only borrow a percentage of the credit limit on their credit card. This percentage varies from one credit card company to the other.
To qualify for a loan against a credit card, users must apply for it by contacting their credit card provider or financial institution. Once approved, the borrower has the amount transferred to their bank account, which they can use for any purpose.
Benefits of Taking a Loan Against Credit Card
· Instant Approval and Disbursement
This type of loan can be very helpful for emergencies because it is pre-approved. The disbursement process is quick. It takes the lender a few minutes to disburse the loan amount to the borrower’s account within a few minutes.
· No Need for Collateral
A loan against a credit card is an unsecured loan that does not require any collateral security. Secured loans demand upfront deposits from borrowers. Loans taken on credit cards don’t.
· Flexibility
A loan against a credit card is a type of personal loan that the borrower can use for medical emergencies, home renovation, or to sponsor a kid’s education, among others.
· Low-Interest Rates
The interest rates charged on loans taken against a credit card are much lower than those charged on other personal loans, making it easier to access funding and save money in the same breath.
· Reward Points
Some credit card companies offer reward points for taking a loan against their credit card. Cardholders can redeem these reward points for various offers and discounts. If you want the best credit card for reward points, the OneCard metal credit card remains one of the best on the market.
Choosing between a loan against a credit card and a personal loan calls for certain considerations highlighted below:
Loan Against Credit Card Vs Personal Loan
· Interest Rates
The interest rates charged on a loan against a credit card are lower than those charged on personal loans.
· Loan Amount
For a personal loan, borrowers get a higher loan amount than that offered via loan against a credit card.
· Repayment Tenure
The repayment tenure for a loan against a credit card is shorter than for a personal loan. It is generally a few months for the former, whereas personal loan repayments can stretch for a few years.
· Collateral Security
A personal loan requires collateral security, but this is not the case with a loan against a credit card.
Factors to Consider Before Taking a Loan Against Credit Card
Loans applied to your card can be lifesaving during emergencies or when borrowers feel cash-strapped. It is important to consider a few factors before applying for one:
· Interest Rates
Compare the interest rates different credit card companies charge before applying for a loan.
· Repayment Tenure
It is important to consider the repayment tenure of the loan. The faster you liquidate the loan, the better it is. You become free after that. A longer loan term can affect your finances and mental health.
· Loan Amount
Loans against a credit card are lower than a personal loan. You should assess your financial requirements before applying.
· Applicable fees
You should review the fees, processing costs, prepayment fees, and late payment penalties.
Summary:
A loan against a credit card is a pre-approved personal loan obtainable via your credit card. Some benefits of a credit card loan include instant approval, quick disbursement, and no collateral requirements. But it is best to consider factors such as interest rates, repayment tenure, loan amount, and charges before applying for a loan on your card.
