Should you take a loan on your credit card?

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Should you take a loan on your credit card?




 Loans against credit cards are similar to ¬¬personal loans, only they don’t need any documentation.

 While a personal loan is among the quickest options for getting a loan, it still requires some documentation and may take a few weeks to process. So if you are looking for money immediately, a loan against your credit card could help you out.

 These loans work out to be cheaper than withdrawing cash on your credit card. You are also likely to be eligible for more money in case of a loan than in case of cash withdrawal.

 But the interest rates on such loans are generally higher than personal loans. Otherwise, it works just like a personal loan, with a processing fee, repayment in monthly instalments and prepayment facility, though there may be extra pre-payment charges.
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The big downside of taking such a loan though is that banks may limit cash withdrawal facilities on your credit card to the extent of the loan you have taken. Many times the credit card limit will also be curtailed, impacting the usage of your credit card.

 Another issue is that you will likely have to pay service tax on interest, which you don’t need to in case of a regular personal loan.
Loans against credit cards are not available to everyone and banks only provide these to customers with high credit standing. But if you are in dire need of money, you can explore this option with your credit card issuer.

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