Covid-19 Crisis Credit Card Loan: Loan Amount, Interest Rate, Processing Fees – Everything You Need To Know

Credit card loans can only be used up to a predetermined limit sanctioned by the card issuer.

The foreclosure restrictions severely affected the lending operations of banks, NBFCs and other lenders. Under current circumstances, pre-approved digital loans have become the most reliable source of credit for dealing with liquidity mismatches, as they typically do not involve any physical interaction. One of the most convenient types of digital loans is the credit card loan. This is a pre-approved loan offered by credit card issuers to their selected credit card holders based on their card type, spending habits, credit limit and repayment history. of invoices.

Here are some of the factors that should be considered before applying for a credit card loan.

1. Loan amount

Credit card loans can only be used up to a predetermined limit sanctioned by the card issuer. By availing this loan, the credit limit of the card holder is temporarily blocked up to the loan amount. However, the limit is gradually released as we continue to repay the IMEs on the loan. Some credit card issuers also offer credit card loans in excess of the credit limit available on the card. But it depends on the customer’s repayment capacity and past repayment behavior as well as other factors. By using this option, the cardholder’s credit limit will remain intact for normal credit card spending.

2. Processing time

Loans for credit cards generally have the fastest processing and disbursement of any credit facility. As eligible cardholders are not required to submit to physical documentation, this helps ensure prompt disbursements. Loan disbursements are made within hours of the loan application. Some card issuers also claim to disburse credit card loans within minutes. Qualifying credit card users simply need to apply online through online banking or contact customer service and the loan amount is credited directly to your account or sent to you via demand draft.

3. Repayment term

The term of credit card loans typically ranges from 1 to 5 years, with some card issuers offering a minimum term of 6 months. However, keep in mind that longer terms would also increase your interest costs. On the other hand, as EMIs will be clubbed with your credit card bill, failure to pay by the due date will also result in finance charges and late payment fees. So choose the duration of your loan according to your repayment capacity.

4. Processing fees

The processing fees on the loan against credit cards can range from 1 to 2.5% of the loan amount, depending on the card issuer. Therefore, be sure to include the processing fee when calculating the overall cost of the loan.

5. Interest rate

The interest rate on your credit card loan will depend on your credit score, your card’s repayment history, employer profile, job profile, type of credit card, etc. personal loans available for the same credit profile. However, card issuers may charge higher interest rates in times of economic uncertainty like the current one. Therefore, those who have multiple credit cards should compare the interest rates offered by their existing credit cards as well as the interest rates of instant personal loans, if any, available from other lenders.

6. Impact on your cash withdrawal limits

Just like credit limits, credit cards also penalize a cash withdrawal limit allowed through your credit card. This limit is usually a fraction of your overall credit limit. Some credit card issuers block the entire cash withdrawal limit for a loan against credit card, while others do not. While ATM withdrawals should always be avoided whenever possible, opening this option could help ease the financial demands.


Credit card loans have one of the fastest disbursements without any documentation. Their pre-approved nature and their ability to apply for loans through online banking or over the phone make them one of the best sources of credit during the pandemic. However, when applying for your credit card loan, be sure to go through instant personal loans, if any, available from other lenders. While these loans can be just as quick, they can cost you lower interest rates than a credit card loan.

(By Sahil Arora, Group Director and Chief Investment Officer,

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