The cash crunch has become an ordeal of this age following a lockdown & disrupted economic activity all around. Whether you need additional funds for paying the school fee of your child, or to meet urgent medical bills; you must know about ready financing options. One of the alternatives that can come handy during the times of financial crisis is Applying for a Credit Card Loan.
What is a Credit Card Loan?
Yes, many banks offer Personal Loans to their Credit Card customers. The loan is offered according to the credit usage history and credit score. The maximum loan amount, however, depends on your available credit card limit. For instance, you can avail of an instant loan on the HDFC Credit Card. This loan is suitable when the cash withdrawal limit on your Credit Card does not satisfy your requirements. Though, you must note that if the amount of Credit Card loan exceeds the total cash withdrawal limit on your card, then the bank might block your cash withdrawal limit till the outstanding loan amount comes below the cash withdrawal threshold.
How to avail a credit card loan?
To avail this loan, you need to log-in to your online Credit Card Account and complete some basic formalities. For instance, if you want to Apply for a Loan on ICICI Bank Credit Card, you can do so through internet banking, mobile banking, or phone banking. The loan amount is disbursed directly to your bank account but can also be availed through a demand draft. Though, it is pertinent to mention here that a Credit Card loan is offered by the bank only to select customers. If your profile does not meet the criteria specified by the bank, you will not be able to apply for a Credit Card loan.
Benefits of a Credit Card Loan
Some of the considerable benefits of a Credit Card Loan are:
Quick processing and prompt disbursals.
No documents are required.
High-value loans according to the available Credit Card limit.
Affordable option than withdrawing cash with your credit card.
Attractive interest rates that are lower than Credit Card interest rates.
Low processing charges.
Repayment tenor of up to 24 months.
No need for collateral
Mistakes to be aware of before applying for a Credit Card Loan
While the benefits of a Credit Card Loan are truly worth considering, there are certain mistakes that you should avoid before applying. Following are 5 major mistakes that you must be aware of before Applying for a Loan Against your Credit Card.
Impact on your credit limit: A loan is offered by banks according to the available credit limit on your Credit Card. This facility is availed when your cash withdrawal limit is not adequate, and you are in urgent need of cash. The bank offers this facility after blocking the equivalent Credit Limit on your Credit Card. Thus, you will not be able to use your Credit Card for other transactions if any need arises. So, you must, therefore, apply only for as much amount which you require, ensuring a sufficient limit is active in your Credit Card for times of emergency.
Expensive loan: You need to ensure that you avail of this facility only when absolutely necessary. This is essential because the interest rate applicable against a Loan On Credit Card is much higher as compared to Personal Loans. For instance, interest rates against Loan on HDFC Bank Credit Card start from 15% per annum, while interest rates against HDFC Personal Loan start from 10.75% per annum. The interest against the loan will be applicable from the first day itself i.e., no interest-free period. So, you must understand that a loan on Credit Card will exert an additional burden on your finances due to higher interest cost.
Restricted usage: Another point you must be aware of is the fact that the usage of your Credit Card will be restricted. For instance, if the amount of the loan you have availed is more than your total cash withdrawal limit, the bank will block the facility of cash withdrawal available with your Credit Card. This limit will continue to be blocked till you repay the loan amount or till the outstanding loan amount is below the cash withdrawal limit. Additionally, the blocked credit limit will be restored gradually as you repay the loan amount.
Increased monthly payments: You must be prepared to shell out a bigger sum every month as the EMI for a loan on Credit Card. It will be over and above the outstanding dues of your Credit Card account. So, you will be paying your regular Credit Card bill along with the EMI, requiring you to arrange for a higher amount every month. Moreover, the payment you will be making will first go towards the loan amount/ EMI and then towards the Credit Card dues.
Associated charges: While the processing fee for a loan on Credit Card is lower, the bank will be levying a host of charges for extending this facility. Cash advance fees, retail finance charges, processing charges, and various other charges will add up to a substantial sum of money. So, calculate these charges as well while ascertaining the affordability of a credit card loan.
Now that you are acquainted with various crucial aspects availing a Credit Card loan, you are in a better position to take a call on the suitability of the loan for your requirements.
Updated On Jun 30, 2026
Written By
Written By Reshma RawatAssistant Content ManagerCredit Cards, Credit Score, Personal Loan, Home Loan, etc.
Reshma Rawat is a passionate writer with a decade of experience in writing for a variety of domains (finance, technology, lifestyle, e-commerce, real estate, etc.). Currently, she is working as Assistant Manager - Content @MyMoneyMantra and writes blogs & webpages on financial products (loans, credit cards, insurance, government financial policies, mutual funds, etc.).
