Loan on Credit Card? Is HDFC Credit Card Loan worth taking?

What is a Loan on Credit Card?

Loan on Credit Card: Every credit card comes with a pre-approved credit limit as determined by the card issuing authority based on your income and credit profile. Based on that unutilized credit limit one can avail a loan on credit card instantly. A credit card loan is a colateral free unsecured personal loan with moderate to high-interest rates.

Yes! You read it right. Your credit card is an instrument that can avail you an instant loan without any additional documents and further verification. With the increase in the use of credit cards day by day, the card issuers are coming up with different credit card loan offers every single day.

Since your credit card issuing company has already approved certain credit limit(based on income and credit score), getting a loan within the specified limit is very convenient and sometimes cost-effective as well.

Credit card loan is becoming very popular among the young generation as the convenience and documentation process is way ahead that of the personal loan and it may be availed almost instantly.

A credit card loan is a collateral-free unsecured personal loan given for short to medium-term. This instant loan on credit card is very much effective to meet your emergency needs.

Ideally, one should keep minimum 4 to 6 months monthly expenses intact in one’s savings account to avoid any kind of loans. This is also very much recommended by the Financial advisors in case of unprecedented events like medical emergencies or job loss occurs.

Features of Loan on Credit Card?

The following features of a Credit Card Loan make it very popular and attractive:

• No documentation: Since a credit card is issued with a certain pre-approved limit, a credit card loan does not require any further documentation.
• Instant approval: A credit card loan is approved instantly as the loan is sanctioned based on the unutilised amount of the pre-approved credit limit of one’s credit card.
• Hassle-Free: While availing a credit card loan you need not visit any Bank’s branch personally. Rather you can do it at your home hassle-free.
• Easy repayment: The repayment term of a loan on credit card may range from 12 months to 60 months depending upon your requirements. So, it can be repaid in equated monthly instalments(EMIs) over the tenure of the loan.
• Unsecured personal loan: A credit card loan is an unsecured form of personal loan. This does not require any collateral security as well. So, it is also known as an unsecured personal loan on credit card.
• Low processing fees: This loan charges very low processing fees than other types of loans.
• Interest rates: Interest rates on credit card loan varies depending upon the types of credit card one enjoys like Gold, Silver, Platinum, Regalia and etc.
• Amount blocked: Your credit card limit gets blocked by the loan amount you avail out of the total pre-approved limit on your credit card.

Eligibility criteria for a personal loan against credit card?

While looking to getting a personal loan against credit card, you should keep in mind that you must be a credit cardholder first. Now take a look at the following eligibility criteria to avail a credit card loan:

• Credit card: You must be a credit card holder to avail a loan on credit card.
• Credit profile/score: To avail a credit card loan one has to have a strong credit history. This means how you have handled all previous loans, repayment on a timely manner and not became a defaulter earlier.
• Utilised credit: You are eligible to avail the credit card loan on the unutilised amount of the specified limit on your card. So, it is always necessary to enhance your card limit whenever you are asked by the credit card company.
• No long-pending amount: One of the crucial criteria to avail credit card loan is that your existing credit card should not have any previous outstanding amount that you have not paid for a very long time. It might affect both your credit score and getting a fresh loan. So, always repay your outstanding amount timely.

Benefits of a Credit Card Loan?

The benefits of a Credit Card Loan are as follows:

• No additional documents: Your credit card issuing authority already possesses documents regarding your income proof, address proof and identity, so availing a loan does not require any further documentation, thus time-saving.
• Low-interest rates: Your credit card company charges 36% to 42% interest rates annually for withdrawing any cash from ATMs. Also, if you roll over any monthly outstanding amount that you could not pay within the due date, after receiving the minimum amount, the card issuer may charge you a high-interest rate up to 42% per annum. But your credit card loan may vary between 12% to 24% per annum which is comparatively lower.
• Low processing fees: As there is no mediator, the loan processing fee is quite low as compared to other loans.
• Instant approval and disbursement: Almost everything is pre-approved therefore the loan on credit card is approved instantly and disbursed within 3 to 5 working days through NEFT/RTGS and even through Bank drafts in your name.

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Top banks providing personal loan against Credit Card?

The following are the top banks that provide personal loan against credit card for meeting your emergency needs:

• HDFC Credit Card Loan.
• ICICI Credit Card Loan.
• SBI Credit Card Loan.
• HSBC Credit Card Loan.
• Axis Bank Credit Card Loan.

In this article, I would discuss only on HDFC Credit Card Loan.

HDFC Credit Card Loan

HDFC Bank, being India’s top class bank also leads the loan on credit card segment. Its credit card business segment has reached to every corner so far.

HDFC Credit Card Loan Types: HDFC Bank primarily offers three types of loans on Credit Card:

1. HDFC Credit Card Insta Loan.
2. HDFC Credit Card Insta Jumbo Loan.
3. HDFC Credit Card Smart EMI.

1. Insta Loan: This is a credit card loan within your overall Credit Card limit. It means if your total credit limit is ₹1.50 Lakh and the available credit limit is ₹1 Lakh, HDFC Bank may provide you with a fresh credit card loan of around ₹1 Lakh maintaining the pre-approved limit.

HDFC Credit Card Insta Loan for ₹1,00,000 and the interest rates for different tenures are shown below:

Tenure (Months)	Interest Rate (%)	Monthly EMI (₹)
12	21%	9,311
24	20.76%	5,127
36	21.96%	3,817
48	20.52%	3,071
60	21.72%	2,746

You can see from the above table that the HDFC Credit Card Loan interest rate for Insta loan is charged a minimum 20.52% and maximum 21.96% per annum. Thus you can see that the insta loan interest rate is quite higher from the secured loans such as Housing loan, Auto loan and loans against collateral(LAC).

Summary of HDFC Insta Loan on Credit Card

Loan type	HDFC Insta Loan on Credit Card
Loan amount eligibility	Depends on your unutilised credit limit
Processing Fee	₹999 plus GST 18%
Minimum Tenure	12 months
Maximum Tenure	60 months
Minimum Interest Rate	20.52% p.a
Maximum Interest Rate	21.96% p.a
Card balance rollover	36% p.a on outstanding amount rollover
Cash withdrawal from ATM rate	42% p.a

In my opinion, the interest rate is very much high for the insta loan. But if you consider the interest rate of the credit rollover amount(36%) or cash withdrawal from ATM against credit card(42%), the rate of interest seems moderate.

2. Insta Jumbo Loan: This jumbo loan offers a credit card loan beyond your existing Credit Card limit. This loan will not block your card limit.

HDFC Credit Card Insta Jumbo Loan for ₹2,50,000 and the interest rates for different tenures are shown below:

Tenure (Months)	Interest Rate (%)	Monthly EMI (₹)
12	18%	22,920
24	17.76%	12,452
36	17.52%	8,978
48	17.28%	7,520
60	17.04%	6,219

For Insta Jumbo loan, HDFC Bank charges a minimum interest rate of 17.04% and a maximum of 18%. Therefore you can see that the interest rate on insta jumbo loan is quite lower as compared to HDFC insta loan.

Summary of HDFC Insta Jumbo Loan on Credit Card

Loan type	HDFC Insta Jumbo Loan on Credit Card
Loan amount eligibility	Depends on your credit profile
Processing Fee	₹999 plus GST 18%
Minimum Tenure	12 months
Maximum Tenure	60 months
Minimum Interest Rate	17.04% p.a
Maximum Interest Rate	18.00% p.a
Card balance rollover	36% p.a on outstanding amount rollover
Cash withdrawal from ATM rate	42% p.a

Also, it seems that insta jumbo loan interest rate is moderately higher as compared to insta loan and other personal loans. But it is better to avail this loan rather than withdrawing cash from ATM using your credit card or if there is any monthly outstanding amount on your card that you can not pay.

3. Smart EMI: This is a kind of option that allows you to convert your purchases into EMI loans once you can not afford to pay your big-ticket purchases in one go.

Some FAQs on Loan on Credit Card/HDFC Credit Card Loan

Can I take loan on HDFC credit card?

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Yes, of course, if you are eligible, you can take a loan on HDFC Credit Card. But it must be kept in mind that Credit Card Loan is very much expensive and should be avoided generally unless an extreme emergency arises and you don’t have alternative arrangement left.

How much loan can I get on HDFC credit card?

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Loan on credit card does not depend on your requirements. It’s not like that if you want ₹5 lakh, you would get that instantly. Rather based on your credit card limit and credit score, HDFC Bank decides how much loan they can offer you.

Generally, for HDFC Insta loan, the unutilized credit limit is available for loan. On the other hand for HDFC Insta Jumbo Loan, the overall credit card limit is available for loan.

What is insta loan on HDFC credit card?

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Insta loan on HDFC credit card is a form of unsecured personal loan that can be availed within the overall credit limit of your credit card. It is also called a loan against credit limit.

I mean let’s say your HDFC credit card has given you a pre-approved limit of ₹2 lakh. Now you have free credit limit left for ₹1.5 lakh, so you may get an insta loan of less than ₹1.5 lakh and that loan amount will block your overall credit limit by that amount.

Is loan on credit card good?

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Honestly speaking, a loan on credit card is not good at all. It is very expensive but has a low processing cost. Apart from extreme medical needs, you should not even think of a credit card loan. Ideally, one should keep at least 6 month’s expenses intact in a bank account to cope up with any unprecedented incidents and to avoid taking a personal loan on credit card.

Conclusion: Is HDFC credit card loan worth taking?

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Yes! HDFC credit card loan is worth taking. The interest rates are moderate as compared to its peers. HDFC Bank is also a leader in the personal loan against credit card segment. It has got maximum reach nationwide.

But as a word of caution one should not generally resort to any type of credit card loan be it HDFC credit card or any other card due to its high-interest cost. It is always better that you put a little amount of money every month if you have not kept adequate money in your savings account for meeting your unforeseen contingencies.