Choosing a credit card loan can help you take control of debt repayment and potentially reduce your interest rates too. Use it to streamline your cash flow and you can be empowered to tackle your debt head on.
Paying off your credit card debt strategically over time in easy and affordable instalments can be an effective strategy for dealing with this loan. Instead of getting stuck in a cycle of debt, explore the opportunities to achieve financial freedom by clearing it.
Guide to Credit Card Loan
A loan on a credit card is a financial service that allows you to get a personal loan against your unutilised credit card limit. Most credit card loans come with an interest-free period of up to 90 days, which makes them even more attractive.
You can repay the debt and the credit card interest charges in simple and affordable instalments based on the chosen tenure.
How Credit Card Loans Help Manage Debt Effectively
If you are feeling trapped by mounting debt and interest, this financial tool can provide a way to break free. Check how a credit card loan helps you pay off debt easily:
Convenient and Quick Access
- You can apply for this facility and potentially receive approval and funds within minutes.
- This facility generally allows you to access funds without additional paperwork.
- What’s more, you can track your monthly instalments and repay online with ease.
Avoids Exhausting Credit Limit
- Your credit card limit will get locked until you repay the loan.
- However, it will not impact your credit limit until you default on payment, ensuring there’s no effect on the credit utilisation ratio.
- Maintaining a higher credit utilisation ratio is essential to avoid any adverse impact on your credit score.
No Need for Collateral
- As you pledge your unutilised credit card limit to get this loan, you don’t need to put up any other as collateral.
- This makes it a more accessible financial service for a wider range of borrowers.
- However, note that the approval of a loan and favourable credit card interest rates will still depend on your creditworthiness.
Competitive Interest Rates
- Compared to regular credit card annual percentage rates (APR), the interest rate of these loans is lower.
- This allows you to save significantly on the interest cost over the entire life of the loan.
- Lower monthly obligations will also assist you in a quicker debt payoff.
Flexible Repayment Options
- Credit card companies generally allow you to choose a repayment tenure as per your financial capabilities and preferences.
- While a shorter tenure will have higher monthly obligations, you’ll pay reduced interest charges.
- Hence, you can opt for a duration that best suits your budget and long-term goals.
How to Pay Off Your Debt Easily
While you can’t eliminate debt overnight, here are some key steps to clear it more quickly:
Spend Responsibly
The most obvious but essential step to take is to curb unnecessary expenses. Spend in a disciplined manner and stick to your needs rather than wants to save more for your credit card loan EMIs. Track your purchases regularly to know the areas where you can control unwarranted spending.
Have an Emergency Corpus
An unexpected expense, such as a medical bill, can derail your debt-reduction plan. Hence, building an emergency fund to cover such unforeseen costs is crucial to avoid any default payment.
Pay Your Bills on Time
To avoid piling up credit card interest charges and late payment fees, always pay your bills promptly. Default repayment can even knock off some points from your credit score, making it overwhelming to secure a loan at favourable rates in the future.
Things to Know When Opting for Credit Card Loans
As mentioned earlier, by taking a loan against a credit card, you can pay off your debt more efficiently. However, here are a few things to know before you apply for this facility:
- Not all banks and companies offer a credit card loan.
- Even if they offer this facility, you need to qualify as per the requirements set by them.
- The credit limit that you pledge to get a loan may get blocked until you repay the loan.
- Parts of your credit card limit may be freed as and when you repay the loan EMIs.
While a credit card loan is a valuable tool in managing your debt, it is not a magical solution. Before applying, assess whether you can afford the monthly instalments. If you want a credit card that offers pre-approved loan offers for your instant needs, get the OneCard the best Metal Credit Card.
With this premium metal card, you can get a cash transfer within 30 seconds and repay the loan with ease within 3 to 24 months. With its powerful application, you can complete the onboarding process in 3 simple steps to get instant cash. You can also enjoy a bevy of other offers, such as 5X rewards on the top 2 spending categories, dining discounts and more. Apply now to reap these benefits.