Latest update February 18th, 2020 9:29 AM
Getting A Personal Loan Against Your Credit Card – An Overview!
Sterling Hayden once said, “The Wind to a sailor is what money is to live on shore.”
Financial tides do come in life when your savings are apparently insufficient, and you need an urgent, life-saver wind of money. That’s where personal loans appear as saviors.
But try for a personal loan at your bank, and you will find that the approval process and hassles of documentation are so time-taking that most often, the emergency like marriage or medical treatment expires by the time the money reaches your hands.
There is a way out for you; personal loan on your credit card. If you possess a credit card and have maintained a good track record, you can be eligible for it. Loan on a credit card is pre-approved, comes with lesser or no documentation, making it the quickest source of unsecured finance.
Personal loan on credit cards is often confused with the cash withdrawals. The main difference is that interest on the loan will be similar or a bit more while that on cash withdrawals may be steeply upwards.
A loan on a credit card is called the unsecured loan. A secured personal loan that is only available for the residents of Philippines is an example of a personal loan without a credit card in the Philippines. Mortgage and documents provide this type of loan.
In the Philippines, another type of personal loan is especially for sea-based OFWs (Overseas Filipino Workers). Their terms and conditions, qualification, etc. are designed to meet the needs of sea-based Filipino workers abroad and their families. This is known as seaman loan.
The advantages of opting for personal loan against credit card are-
- Loan Amount is higher than credit limit. Some banks offers are within the credit limit.
- Interest rates are attractive.
- Tenure ranges from 1 to 5 years.
- Funds are directly transferred to the bank account of the holder. If the borrower does not have an account in the particular bank, the transfer is either done through DD or NEFT.
- The verification process is simple. No documents are required for verification.
- The guarantee isn’t required. There is no need for a mortgage or a guarantor.
Though it all might look good, in a bank nothing comes without fees. It mainly includes pre-payment and processing charges. One must check following points with the bank:
- Terms and Conditions
- Clause of advance EMI payment
- Whether cash or credit limit is released after complete repayment, including interest, service tax, etc.
- Option to cancel loan
- Late payment charges
- Auto-Debit options
- Pre-payment or partial closure
- Availability of multiple loans against single card
- Changes in tenure after commencement of loan account
- Changes in payment options
Finally,
The interest rate on an unsecured loan is higher than any secured loan. Thus, while going for it, first compare the rates with personal loans. Use your credit card wisely.
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