Credit cards offer more than just rewards and convenience; they can also be a gateway to fast financing when you need it most. One often-overlooked feature is the loan of credit card facility. If you’re facing a cash crunch or unexpected expenses, this could be the solution that helps you bridge financial gaps—without the hassle of traditional loan applications.
In this blog, we’ll break down exactly what a loan against a credit card is, how it works, how to apply for one, and whether it’s the right choice for you. We’ll also look at key benefits, potential pitfalls, and how it compares to other financing options like small business loans and loan to buy a business.
What is a Loan Against a Credit Card?
A loan of credit card is essentially a pre-approved personal loan offered by your credit card issuer. It doesn’t require any new documentation or collateral. Instead, it leverages your creditworthiness and spending history with the issuing bank.
This facility allows cardholders to borrow a lump sum from their available or separate limit. Unlike regular credit card usage where interest is charged only on the unpaid balance, loans against credit cards come with fixed EMIs (Equated Monthly Installments) and predetermined tenure.
Quick Snapshot
Feature | Description |
Loan Type | Unsecured personal loan |
Documentation Required | None (for pre-approved users) |
Interest Rate | Fixed (varies by bank & user profile) |
Repayment Method | Monthly EMIs |
Credit Limit Impact | Reduces available credit if from existing limit |
Processing Time | Instant to a few hours |
How Does It Work?
Banks and credit card issuers assess your credit card usage, payment history, and overall creditworthiness. If you qualify, a loan offer is made—either via SMS, email, or directly through the bank’s app or website.
You can choose the amount (up to a certain limit), the repayment tenure (usually 6 to 60 months), and see your EMI amount in real-time. Once accepted, the loan amount is either credited directly to your bank account or converted into a part of your card balance with a separate repayment structure.
Benefits of a Loan Against Credit Card
- Instant access to funds: Ideal for emergency situations like medical bills or urgent purchases.
- No paperwork required: Since it’s pre-approved, you skip all documentation.
- No collateral needed: This is a type of unsecured credit.
- Flexible repayment: Choose tenure that suits your budget.
- Lower interest than cash advances: Compared to withdrawing cash from your card, the interest rate is generally lower.
Looking to improve your chances of credit eligibility? Check out our guide on Best Credit Cards for People with Low Credit Scores in 2025.
When Should You Consider It?
A loan of credit card can be a smart choice in these scenarios:
- Unexpected medical or travel emergencies
- Home repairs or urgent purchases
- Short-term capital needs for a small business
- Quick funding while you wait for approval on bigger loans like a loan to buy a business
If you’re a new entrepreneur or startup founder, also explore our Top 7 Business Credit Cards for Startups in 2025.
Step-by-Step: How to Apply
Here’s how you can typically apply for a loan against your credit card:
- Check your eligibility: Log into your bank or card issuer’s portal to see if you have a loan offer.
- Choose your amount: Select the amount you wish to borrow. This can be part of or separate from your existing credit limit.
- Pick a repayment tenure: Usually ranges from 6 months to 5 years.
- Review terms: Look at interest rates, processing fees, and prepayment conditions.
- Submit your request: Once you accept the offer, the amount is instantly transferred to your bank account.
Fees & Charges: What to Expect
Fee Type | Typical Charges |
Interest Rate | 13% – 24% p.a. |
Processing Fee | 1% – 3% of loan amount |
Prepayment Charges | 0% – 5% (depends on lender) |
Late Payment Fee | As per standard credit card terms |
Want a card that offers better cash benefits? See our list of Top Cashback Credit Cards for 2025.
Loan Against Credit Card vs. Other Loans
Criteria | Credit Card Loan | Small Business Loan | Loan to Buy a Business |
Collateral Required | No | Sometimes | Often yes |
Processing Time | Instant to 24 hours | 2–7 days | 1–2 weeks |
Paperwork Needed | Minimal/None | Moderate | Extensive |
Use Case | Personal/Short-term | Business expenses | Business acquisition |
Interest Rate | Medium | Low–Medium | Medium–High |
Is It Right for Your Business?
If you run a seasonal or early-stage company and need a quick infusion of capital, the loan of credit card feature can help. While it shouldn’t replace long-term financing, it works well for short-term gaps or emergency purchases.
For business owners, we at Millendeal recommend combining this option with our tailored small business loans that offer better rates and structured terms.
Tips to Maximize Benefits
- Always pay EMIs on time to avoid penalties
- Use loan comparison tools to evaluate offers
- Opt for pre-approved offers to skip documentation
- Avoid borrowing if you’re already carrying high card debt
Planning to expand or acquire a new venture? Look into loan to buy a business options, which offer structured plans for acquisitions.
Final Thoughts
A loan of credit card is a powerful financial tool when used wisely. It provides immediate access to cash, minimal processing time, and a hassle-free application process. Whether you’re managing personal emergencies or small business needs, this facility can bridge the gap quickly and efficiently.
Still unsure? Visit Millendeal to explore the best loan and credit card solutions tailored to your financial journey.
Frequently Asked Questions
Q1: Can I apply for a credit card loan without affecting my credit score?
A: Yes, most pre-approved offers do not involve a hard credit check unless specified.
Q2: What’s the maximum I can borrow using this method?
A: It depends on your credit limit and your relationship with the card issuer.
Q3: Is this better than using a credit card for big purchases?
A: Yes, because it usually offers lower interest and fixed EMIs, making budgeting easier.
Q4: What happens if I miss an EMI?
A: Late fees apply and your credit score may be negatively impacted.
Q5: Can I use it for business needs?
A: Absolutely. It’s often used for short-term capital needs, especially in small businesses.
Ready to explore your financing options? Visit Millendeal.com to compare the best loan and credit card solutions, including small business loans, loan to buy a business, and personalized credit offers tailored for your needs.
