How to Take a Loan Against a Credit Card: Complete Guide

Published on: February 21, 2026

How to Take a Loan Against a Credit Card

When life throws financial surprises, your credit card can do more than you think

We’ve all been there. An unexpected medical bill, a sudden car repair, a family emergency, or maybe an opportunity that requires quick cash. Life doesn’t always give us time to prepare financially.

When these moments hit, many of us reach for our credit cards. But here’s the problem – what if you need actual cash, and your credit card’s cash withdrawal limit just isn’t enough?

This is where most people feel stuck. But there’s actually a solution that many cardholders don’t know about.

You can take a loan against your credit card.

Yes, it’s a real thing. And for many people facing short-term cash crunches, it has proven to be incredibly helpful.

In this blog, we’ll explain everything you need to know about loans against credit cards – what they are, how to apply, the benefits, eligibility criteria, and important things to consider before you apply.

Let’s dive in!

What Exactly Is a Loan Against Credit Card?

Let’s start with the basics.

A loan against a credit card is an unsecured loan that allows you to borrow money against your available credit limit. Instead of using your credit card to make purchases at stores or online, you can convert a portion of your unused credit limit into actual cash.

Here’s a simple way to think about it:

Let’s say your credit card has a total limit of ₹2,00,000, and you’ve used ₹50,000 for purchases. That means you have ₹1,50,000 available. With a loan against your credit card, you can borrow from this unused ₹1,50,000 and get it transferred directly to your bank account.

The key features:

It’s unsecured: You don’t need to pledge any property, gold, or other assets as security
No extra collateral needed: Your credit card itself acts as the security
Minimal documentation: Since you’re already a credit card customer, the bank already has most of your information
Quick disbursal: The money can reach your account much faster than traditional loans

Think of it as a bridge between a regular credit card cash withdrawal and a personal loan. It gives you more money than a typical ATM withdrawal limit while being easier to get than a full personal loan application.

Loan Against Credit Card vs. Credit Card Cash Withdrawal: What’s the Difference?

You might be wondering – why not just withdraw cash from an ATM using my credit card?

Good question! There are some important differences:

Feature	Cash Withdrawal	Loan Against Credit Card
Amount available	Limited (usually 20-40% of credit limit)	Higher (based on unused credit limit)
Interest rate	Very high (2.5-3.5% per month)	Lower than cash withdrawal
Interest-free period	None (interest from day one)	Structured EMI repayment
Repayment	Lump sum or minimum due	Fixed monthly EMIs
Additional fees	Cash advance fee applies	Lower processing fee

As you can see, a loan against a credit card typically offers better terms than a simple cash withdrawal. The interest rates are usually lower, and you get a structured repayment plan instead of a lump sum payment.

How to Apply for a Loan Against Credit Card: Step-by-Step Guide

Ready to apply? Here’s exactly how to take a loan on your credit card:

Step 1: Check Your Eligibility

Before anything else, make sure you qualify for this loan. Eligibility typically depends on:

Having an active credit card with a good standing
Maintaining a decent credit score
Having a stable income
A history of making timely payments
Sufficient unused credit limit

Not sure if you’re eligible? You can usually check this through your bank’s net banking portal or mobile app. Many banks also send pre-approved loan offers to eligible customers via SMS or email.

Step 2: Contact Your Credit Card Issuer

Once you’ve confirmed your eligibility, reach out to your credit card company. You can do this by:

Calling customer service: The number is usually on the back of your card
Visiting a branch: Speak to a representative in person
Using net banking: Many banks offer online application options
Using the mobile app: Check if your bank’s app has a loan section

During this step, ask about:

The loan amount you’re eligible for
Applicable interest rates
Processing fees
Repayment tenure options
Any other terms and conditions

Step 3: Complete the Application Form

If you decide to proceed, you’ll need to fill out an application form. This could be:

An online form through net banking or mobile app
A physical form at the bank branch
A form sent to you via email

Provide accurate information about:

Your personal details (name, address, contact information)
Financial details (income, employment)
The loan amount you need
Your preferred repayment tenure

Step 4: Submit Required Documents

Although loans against credit cards require minimal documentation, you may still need to provide:

Identity proof: Aadhaar card, PAN card, passport, or driving license
Address proof: Utility bills, rent agreement, or Aadhaar card
Income proof: Salary slips, bank statements, or IT returns
Recent credit card statement: To verify your card usage and limit

Since you’re already a credit card holder, the bank has most of your KYC documents on file. This makes the process much quicker than applying for a fresh loan.

Step 5: Wait for Approval and Disbursal

After submitting your application and documents, the bank will review everything. This evaluation typically checks:

Your credit history
Your repayment track record
Your current credit utilization
Your overall creditworthiness

If approved, you’ll receive:

Confirmation of the loan sanction
Details of the loan terms and conditions
Information about the interest rate and EMI amount

The loan amount will then be disbursed to you through:

ECS transfer: Directly to your registered bank account
Demand draft: A physical DD issued by the bank

The entire process, from application to disbursal, can sometimes be completed within 24-48 hours, especially for pre-approved customers.

Benefits of Taking a Loan Against Credit Card

Why should you consider this option? Here are the key advantages:

1. Instant Access to Funds

When you’re in a financial emergency, time matters. A loan against your credit card provides quick access to money. Once approved, the amount is transferred directly to your bank account, and you can use it immediately.

2. No Collateral Required

Unlike secured loans that require you to pledge assets like property or gold, this loan is completely unsecured. Your credit card and credit history are enough. No need to risk your valuables.

3. Minimal Documentation

Already a credit card holder? The bank already has your KYC documents, income proof, and other details on file. This means less paperwork for you and faster processing times.

4. Lower Interest Than Cash Withdrawal

Here’s a big one. The interest rate on a credit card loan is typically lower than the interest charged on cash withdrawals from your credit card. Over time, this difference can save you a significant amount of money.

However, keep in mind: The interest rate is usually higher than traditional personal loans. So, it’s best suited for short-term needs rather than long-term borrowing.

5. Apply from Anywhere

Whether you’re at home, at work, or traveling, you can apply for a credit card loan online. No need to visit a branch if you’re comfortable with net banking or mobile apps. This convenience is especially valuable during emergencies.

6. Low Processing Fees

Compared to personal loans, credit card loans often come with lower processing fees. This reduces the overall cost of borrowing and makes it a more affordable option for short-term funding needs.

7. Easy EMI Repayment

Repaying the loan is straightforward. The loan amount is converted into monthly EMIs, which are billed to your credit card. You don’t need to remember separate payment dates – it becomes part of your regular credit card bill.

8. No Restrictions on Usage

Once the money is in your account, you can use it for any legitimate purpose:

Medical expenses
Education fees
Home repairs
Travel
Wedding expenses
Debt consolidation
Business needs

The bank doesn’t dictate how you spend the borrowed money.

Who Is Eligible for a Loan Against Credit Card?

Not everyone can get this loan. Here are the typical eligibility requirements:

Basic Requirements

You must be an existing credit card holder: This loan is only available to current cardholders, not new applicants
Your card must be active and in good standing: Cards that are blocked or have payment defaults may not qualify

Factors That Improve Your Chances

Strong Credit History
Banks look at how responsibly you’ve used credit in the past. If you’ve been paying your credit card bills on time and haven’t defaulted on other loans, you’re in a good position.

High Credit Limit
A higher credit limit generally means you can borrow more. It also indicates that the bank trusts you with larger amounts.

Good Credit Score
While specific requirements vary by bank, having a credit score above 700 typically improves your chances of approval and may get you better interest rates.

Higher Income Bracket
Banks feel more confident lending to individuals with stable, higher incomes since they’re more likely to repay without issues.

Pre-Approved Status
Many banks offer pre-approved credit card loans to select customers. If you receive such an offer via SMS, email, or see it on your net banking dashboard, you’re already deemed eligible by the bank.

How to Check Your Eligibility

Visit your bank’s website and look for the credit card loan section
Log into net banking and check for pre-approved offers
Use the mobile app – many apps show personalized loan offers
Call customer care and ask about your eligibility
Visit the nearest branch for in-person assistance

Important Things to Know Before Applying

A loan against your credit card can be helpful, but it’s not the right choice for everyone in every situation. Here are some things to consider:

1. Top-Up Loan Option

Some banks offer top-up loans for existing credit card loan customers. If you already have a loan against your credit card and have been repaying it well, you might be eligible to borrow additional funds. This can be useful if your financial needs have increased.

2. Flexible Loan Tenure

Credit card loans typically offer flexible repayment periods, ranging from a few months to a few years. The exact tenure options depend on:

Your credit limit
Your credit profile
The bank’s policies

Choose a tenure that balances affordable EMIs with reasonable total interest cost. Longer tenures mean smaller EMIs but more interest paid overall.

3. Impact on Credit Card Usage

Here’s something many people overlook.

When you take a loan against your credit card, the loan amount is deducted from your available credit limit. For example, if your limit is ₹2,00,000 and you take a loan of ₹1,00,000, you’ll only have ₹1,00,000 left for regular card transactions.

Think carefully about whether you can manage with the reduced limit until the loan is repaid.

4. Consequences of Default

This is serious. If you fail to pay your EMIs on time:

Late payment charges will be applied
Your credit score will drop, affecting your ability to get loans in the future
The bank may take recovery actions
Your overall credit card account may be affected

Only borrow what you’re confident you can repay.

5. Pre-Closure Charges

Want to pay off your loan early? That’s generally a good idea to save on interest. However, some banks charge a pre-closure fee or prepayment penalty for early repayment.

Before taking the loan, ask about these charges. Factor them into your decision, especially if you think you might want to close the loan ahead of schedule.

6. Compare Interest Rates

While credit card loans are convenient, they’re not always the cheapest option. If you have time and the situation isn’t an emergency, compare:

Personal loan rates from your bank
Rates from other lenders
Other credit options available to you

For long-term needs, a personal loan might offer better rates. Credit card loans are best for short-term, urgent requirements.

When Should You Consider a Loan Against Credit Card?

This borrowing option makes the most sense when:

You need money quickly and can’t wait for a personal loan approval
The amount you need is more than your cash withdrawal limit allows
You prefer a structured EMI repayment over lump sum payment
You have a good repayment plan and can afford the EMIs
It’s a short-term need, and you’ll repay within a few months
You don’t want to pledge any collateral or deal with extensive paperwork

When Should You Avoid It?

This might not be the best choice if:

You’re already struggling to pay your existing credit card bills
You need a large amount for a long-term purpose (consider a personal loan instead)
You don’t have a clear repayment plan
You’re taking the loan to pay off other debts without addressing the root cause of your financial issues
Better options with lower interest rates are available to you

Wrapping Up

Life is unpredictable, and sometimes we need quick access to funds. A loan against your credit card can be a valuable tool in such situations.

It offers:

Quick and easy access to money
Minimal documentation
No collateral requirements
Structured EMI repayments
Lower interest than credit card cash withdrawals

However, like any financial product, it comes with responsibilities. The interest rates are higher than personal loans, defaulting can hurt your credit score, and you’ll have reduced credit limit until repayment.

The key is to borrow responsibly.

Before applying, evaluate your actual need, understand all the terms and conditions, compare with other options if time permits, and most importantly – make sure you have a solid plan to repay.

When used wisely, a loan against your credit card can help you navigate financial emergencies without derailing your long-term financial health.

We hope this guide has given you a clear understanding of how credit card loans work and how to make the most of this option when you need it.

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Disclaimer: This blog is for educational purposes only. Interest rates, terms, and conditions vary by bank and are subject to change. Always check with your specific credit card issuer for accurate, up-to-date information before making financial decisions.

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