Everything You Need to Know About Credit Card Loans in India

Credit cards are one of the most flexible financial tools available today. While most people use them for regular shopping, travel bookings, or emergency spending, few are aware that they also come with another powerful feature loans against your credit card.

Yes, you can actually get a loan directly through your credit card, with minimal paperwork, fast approval, and no collateral. In this post, we’ll break down everything in detail — how it works, who can apply, charges involved, which banks offer it, and tips to use it wisely.

What Is a Loan Against Credit Card?

A Loan Against Credit Card is an unsecured personal loan that is offered to eligible credit card users by their bank. It’s usually a pre-approved loan based on your credit history, spending behavior, and repayment record. Since it’s linked to your credit card, it’s far easier and quicker to get than a normal personal loan.

Depending on the type, it can be:

• Within the credit limit: The loan amount is deducted from your credit limit.
• Over and above the credit limit: The loan is offered as additional credit (like in HDFC’s Insta Jumbo Loan).

How Does a Credit Card Loan Work?

Let’s understand how this loan process actually works in India:

• You receive a loan offer: If you’re eligible, your bank may send you an offer through SMS, email, your mobile banking app, or net banking.
• You accept the offer: You can apply instantly by tapping “accept” and choosing the amount and repayment period.
• Loan is disbursed: The money is transferred either directly to your savings account or made available as part of your credit balance.
• Repayment begins: The loan is repaid in monthly EMIs (Equated Monthly Installments) over the chosen tenure. These EMIs are added to your regular credit card bill.

There’s no need to submit income proof or documents, and no bank visits are usually required.

Two Main Types of Loans Against Credit Cards

• Insta Loan: A quick loan you can get from the available limit on your credit card. It's a short-term borrowing option. This means your available credit limit is reduced by the amount you borrow. However, once you repay the loan, your credit limit is fully restored, making it a convenient option for immediate and temporary financial needs.
• Jumbo Loan (or Insta Jumbo Loan): It, also known as Insta Jumbo Loan, is offered over and above your regular credit card limit. It provides extra funds without affecting your current card limit, allowing you to continue using your credit card as usual. This type of loan typically comes with a different interest rate compared to standard credit card transactions.

Eligibility Criteria

• Credit Score: You usually need a score of 700 or above to qualify.
• Repayment History: Banks check if you pay your dues on time and have a good record.
• Card Usage: How often and how well you use your credit card matters.
• Monthly Income: A steady and good income increases your chances.
• Relationship with the Bank: If you’ve been a long-time or trusted customer, it helps.

Note: Even if you don’t see a loan offer, you can still contact your bank to check if you’re eligible.

Features of Credit Card Loans

• Loan Tenure: You can choose to repay the loan over a period of 6 to 60 months, depending on what your bank offers.
• Loan Amount: The loan amount can vary from as low as ₹10,000 to as high as ₹10,00,000, based on your eligibility.
• Interest Rates: Interest is usually charged at 10% to 24% per year, depending on your credit profile and the bank’s policy.
• Processing Time: The loan can be processed instantly or within a few hours, especially if you’re a pre-approved customer.
• Disbursal Mode: The loan amount is either transferred directly to your bank account or added as credit to your card, depending on the type of loan.
• Repayment: You repay the loan in monthly EMIs, which are added to your regular credit card bill.
• Foreclosure Option: Many banks allow you to close the loan early before the tenure ends, though a small foreclosure fee may apply.

Benefits of Loan Against Credit Card

• Instant Access to Funds: You can get the money quickly, often within minutes, especially if you already have a pre-approved offer from your bank.
• No Documentation Required: Since the bank already has your details, you don’t need to submit any extra paperwork.
• Pre-approved Offers: Many banks provide ready-to-use loan offers on your credit card, saving you time and effort.
• No Impact on Reward Points: Taking a loan against your credit card doesn’t reduce or cancel the reward points you’ve earned.
• Flexible Repayment Options: You can choose to repay in easy EMIs over a few months or more, depending on your comfort.
• Can Boost Your Credit Score: If you repay the loan on time, it helps build a stronger credit history and can improve your credit score.
• No Restrictions on How You Use the Money: You can use the loan for anything—medical bills, travel, shopping, or emergencies—there are no limits on usage.

Limitations to Keep in Mind

• Interest Rate May Be High
• Hidden Charges
• EMIs Increase Card Bill
• Reduced Card Limit (In Insta Loan)
• Temptation to Overspend

Top Indian Banks Offering Credit Card Loans

• HDFC Bank offers Insta Loan and Insta Jumbo Loan options with flexible tenures ranging from 6 to 60 months. Loan amounts vary from ₹5,000 up to ₹15,00,000, with interest rates starting at 10.99% per annum. The processing fee for these loans is 1.10%.
• ICICI Bank provides Personal Loans on Credit Cards with amounts ranging from ₹10,000 to ₹20,00,000. The repayment tenure spans from 12 to 60 months, and interest rates start at 11.25% per annum. One of the key benefits is that no documentation is required to apply for this loan.
• Axis Bank offers the Insta Easy Loan, which is available within your existing credit card limit. This loan comes with flexible repayment options, allowing you to choose terms that suit your financial situation.
• SBI Card provides Pre-approved EMI Loans that are disbursed directly into your SBI savings account. These loans have repayment tenures ranging from 6 to 24 months, making them suitable for short to medium-term financial needs.
• Kotak Mahindra Bank offers a Loan Against Card (LAC) with quick disbursal to meet urgent requirements. They also provide Insta Cash and Convert to EMI facilities, giving customers convenient ways to access funds and repay in installments.

Interest Rates and Charges

How to Apply for a Credit Card Loan?

To apply for a credit card loan, you can use your bank’s mobile app and look for pre-approved offers in the credit card section. You can also apply instantly through internet banking on the bank’s website. Another way is to call customer care and ask for a loan. Some banks let you reply YES to an SMS loan offer to apply easily. If you prefer, you can visit the bank branch and fill out a loan application in person.

Things to Check Before Taking a Credit Card Loan

• Check if the interest rate is fair and reasonable compared to other loan options.
• Know the total repayment amount you will have to pay by the end of the loan.
• Confirm whether the loan is within your credit card limit or if it is offered over and above your limit.
• Ask about any processing fees or hidden charges that may apply.
• Find out if you can close or pay off the loan early without facing any penalty fees.
• Understand if taking the loan will affect your credit card usage, such as reducing your available credit or impacting reward points.

Loan Against Credit Card vs. Personal Loan

Final Thoughts

A loan against your credit card is a fast and hassle-free way to get money when you need it. It’s perfect for urgent needs like medical expenses, travel, or weddings. But like any loan, it comes with responsibilities. Always check the terms carefully, compare interest rates, and borrow only what you can repay.

If used wisely, this feature can save time, help in emergencies, and even improve your financial credibility. But if misused, it can lead to debt traps and credit score damage.