Can You Take a Personal Loan on a Credit Card? Comprehensive 2025
Personal Loan on a Credit Card : In today’s financial landscape, the need for quick and convenient funding solutions has become more critical than ever. Whether it’s for an emergency, a large purchase, or consolidating debt, consumers are increasingly turning to both personal loans and credit cards to meet their financial needs. Interestingly, there is a hybrid solution that combines the speed of a credit card with the structure of a personal loan—a personal loan on a credit card.
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Often referred to as a credit card loan, this facility allows eligible cardholders to borrow a pre-approved loan amount against their credit limit or as an additional unsecured credit facility. As 2025 unfolds, more banks and financial institutions in India are offering this product due to its growing popularity among urban and salaried individuals. This blog explores everything you need to know about personal loans on credit cards, including how they work, who should consider them, benefits, risks, comparisons with traditional personal loans, and more.
What is a Personal Loan on a Credit Card
A personal loan on a credit card is a form of unsecured credit offered by credit card issuers to select cardholders. It is usually pre-approved, which means that there is minimal or no documentation involved. The loan amount can either be a part of your existing credit card limit or an additional amount sanctioned over and above your limit.
Key Characteristics:
- No collateral required
- Instant or same-day disbursal
- Fixed EMI payments for the loan tenure
- Loan tenure usually ranges from 6 to 60 months
- Can be repaid via auto-debit, net banking, or cheque
Read more: How Credit Cards Work in India: Detailed Explanation for 2025
These loans can be used for various purposes such as medical emergencies, weddings, education expenses, travel, or even home renovation.
How Does a Credit Card Loan Work?
The process for obtaining a credit card loan is simple and usually involves the following steps:
- Eligibility Check: The card issuer assesses your repayment history and credit utilization ratio. Based on your profile, they make a pre-approved offer.
- Loan Offer: The offer includes details such as loan amount, interest rate, tenure, and EMI. You may receive this via SMS, email, or your banking app.
- Acceptance: You can accept the loan offer online or via customer service. Once accepted, the loan amount is credited to your bank account or made available on your card.
- Repayment: EMIs are deducted monthly from your savings account or credit card billing cycle.
Top Banks Offering Credit Card Loans in India 2025
| Bank | Loan Name | Interest Rate (Annual) | Tenure |
|---|---|---|---|
| HDFC Bank | Insta Loan / Insta Jumbo Loan | 11.88% – 21% | Up to 60 months |
| ICICI Bank | Loan on Credit Card | 12% – 18% | Up to 48 months |
| SBI Cards | Encash | 13% – 24% | Up to 36 months |
| Axis Bank | Instant Loan on Credit Card | 13.5% – 24% | 12 – 48 months |
| Kotak Mahindra Bank | Personal Loan on Credit Card | 12% – 18% | Up to 60 months |
Credit Card Loan vs. Traditional Personal Loan
| Feature | Credit Card Loan | Personal Loan |
| Approval Time | Instant / Pre-approved | 1 to 3 days |
| Documentation | Minimal or none | KYC + income proof |
| Interest Rate | 12% – 24% | 10% – 18% |
| Loan Amount | Up to credit limit or slightly higher | Up to INR 25 lakhs or more |
| Tenure | 6 to 60 months | 12 to 60 months |
| Disbursal Time | Within hours | 1 to 3 working days |
Advantages of Taking a Loan on a Credit Card
- Instant Access to Funds: As the loan is pre-approved, the disbursal process is quick and often instant.
- No Additional Documentation: No need to submit income proofs or KYC again.
- Flexible Repayment Tenure: Choose from multiple EMI plans.
- Competitive Interest Rates: Lower than credit card revolving interest rates.
- Digital Application Process: Available via net banking, mobile app, or customer care.
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Disadvantages and Risks
- Higher Interest Rate than Secured Loans: Although lower than credit card APR, it’s still higher than some personal loans.
- Limited Loan Amount: You can only borrow what your credit limit permits.
- Impact on Credit Limit: May reduce available credit, affecting your credit utilization ratio.
- Penalties for Prepayment: Some banks charge a fee for early loan closure.
- Risk of Overspending: Easier access may lead to poor financial discipline.
Eligibility Criteria
- Age: Minimum 21 years
- Good credit score (700+ preferred)
- Existing credit card holder
- Minimum usage history of 6 months to 1 year
- Regular bill payment track record
Application Process
- Log in to your bank’s net banking or app
- Navigate to “Offers” or “Loans on Credit Card”
- Check your pre-approved limit and terms
- Choose loan amount and EMI plan
- Accept terms and receive funds instantly
EMI Calculation Example
Loan Amount: INR 1,00,000
Interest Rate: 15% per annum
Tenure: 24 months
Monthly EMI: INR 4,849 approx
Total Payable: INR 1,16,376
Total Interest: INR 16,376
Credit Score Impact
If EMIs are paid on time, your credit score can improve. However, missed payments or high credit utilization due to blocked limits can negatively impact your score.
Who Should Consider a Credit Card Loan?
- Salaried individuals needing quick cash
- People with good repayment track record
- Cardholders with short-term funding needs
- Customers without time for full personal loan processing
Who Should Avoid It?
- Individuals already carrying card debt
- Borrowers needing high-value loans over INR 5 lakhs
- Users who prefer long repayment tenures
- Anyone unable to manage monthly EMI burden
Alternatives to Credit Card Loans
- Traditional personal loan
- Loan against fixed deposit
- Gold loan
- BNPL (Buy Now Pay Later) options
- Overdraft facility
FAQs
Can I apply for a loan if I haven’t received an offer?
Yes, some banks allow requests even without a pre-approved offer.
Can I foreclose the loan?
Yes, but charges may apply.
Can the loan be transferred to another account?
Usually, yes. Banks let you choose the deposit account during application.
Is GST applicable on EMIs?
Yes, 18% GST may apply on processing fees and interest.
Conclusion
Taking a personal loan on a credit card is a viable financial solution for those who need fast, short-term funding without paperwork. While it comes with a higher interest rate than secured loans, its speed, convenience, and structured EMI plan make it suitable for salaried individuals and professionals in urgent need.
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However, it is essential to evaluate your repayment capacity, understand the impact on your credit limit, and compare it with traditional loan products before opting for it.
Disclaimer : Loan terms and conditions vary by financial institution. Please verify current interest rates, processing fees, eligibility, and other charges directly with your credit card provider.
