Explore Airtel Thanks App    X
  1. Home
  2. »
  3. Credit Card
  4. »
  5. Loans against Credit Card – Explained

Loans against Credit Card – Explained

In today’s fast-paced world, unexpected expenses can arise at any moment, putting a strain on your finances. During such times, having access to quick and hassle-free funds can be a lifesaver. Loans against credit cards offer a convenient solution for those in need of immediate financial assistance. In this comprehensive guide, we’ll delve into the intricacies of loans against credit cards, exploring how they work, their benefits, considerations before opting for one, debunking common misconceptions, and offering tips for responsible usage.

Understanding Loans Against Credit Cards

Loans against credit cards, also known as credit card cash advances, allow cardholders to borrow money against their credit card’s available credit limit. Unlike traditional loans, which involve applying for a separate line of credit, loans against credit cards utilise the existing credit card balance. This means that if you have available credit on your card, you can obtain a loan without going through a lengthy approval process.

How Loans Against Credit Cards Work

To obtain a loan against your credit card, you can visit an ATM or approach your credit card issuer directly. The amount you can borrow typically depends on your available credit limit and may be subject to a cash advance limit, which is often lower than your overall credit limit. Upon approval, the borrowed amount is transferred to your bank account or provided in cash.

Interest rates for loans against credit cards tend to be higher than those for standard purchaes. Additionally, most credit card issuers impose a cash advance fee, usually a percentage of the total amount withdrawn. It’s crucial to review your card’s terms and conditions to understand the applicable interest rates, fees, and repayment terms.

Read more: How to increase your credit card limit?

Advantages of Loans Against Credit Cards

One of the primary advantages of loans against credit cards is the urgency of funds. Unlike traditional loans that may require extensive paperwork and approval processes, loans against credit cards offer quick access to cash when you need it most. Additionally, the application process is typically straightforward, requiring minimal documentation.

Furthermore, loans against credit cards provide flexibility in terms of repayment. While making minimum payments is an option, it’s advisable to repay the borrowed amount as soon as possible to minimise interest charges. Some credit card issuers may offer promotional interest rates or flexible repayment plans, providing borrowers with additional repayment options.

Things to consider before opting for a loan against a credit card

Before opting for a loan against your credit card, it’s essential to consider several factors. Firstly, carefully review the interest rates and fees associated with the loan. Since interest rates for cash advances are typically higher than those for purchases, borrowing a large sum could result in substantial interest charges.

Additionally, borrowing against your credit card’s available credit limit can impact your credit score. Utilising a significant portion of your available credit may lower your credit score, particularly if you exceed your credit utilization ratio. Therefore, it’s essential to assess your repayment capacity and borrow only what you can afford to repay.

Read more: How to get a credit card with your fixed deposit?

Moreover, explore alternative financing options before opting for a loan against your credit card. Depending on your financial situation, you may qualify for personal loans, lines of credit, or overdraft protection, each with its own set of terms and conditions.

Common Misconceptions About Loans Against Credit Cards

Misconceptions surrounding loans against credit cards abound, leading to confusion among consumers. One common misconception is equating cash advances with loans against credit cards. While both involve borrowing money against your credit card, loans against credit cards typically offer more favourable terms than cash advances.

Additionally, some individuals mistakenly believe that loans against credit cards have the same repayment terms as standard purchases. In reality, interest accrues from the date of the cash advance, with no grace period for repayment, making it essential to repay the borrowed amount promptly.

Furthermore, there’s a misconception that loans against credit cards are always a costly financing option. While interest rates and fees may be higher than those for traditional loans, borrowers can minimise costs by repaying the borrowed amount quickly and exploring promotional offers from credit card issuers.

Read more: APR on credit card – complete guide

Tips for Responsible Use of Loans Against Credit Cards

To maximise the benefits of loans against credit cards while minimising financial strain, it’s essential to adopt responsible borrowing practices. Firstly, borrow only what you need and can afford to repay within a reasonable timeframe. Avoid borrowing large sums that could lead to excessive interest charges and financial hardship.

Secondly, strive to repay the borrowed amount as soon as possible to minimise interest accrual. Making timely repayments not only reduces interest charges but also helps maintain a positive credit history and improves your credit score.

Lastly, seek financial advice if you’re experiencing difficulty managing your debts or are unsure about the best course of action. A financial advisor can offer guidance tailored to your specific circumstances, helping you make informed decisions and achieve financial stability. 


Loans against credit cards offer a convenient and accessible financing option for individuals in need of immediate funds. By understanding how these loans work, weighing their benefits and considerations, debunking common misconceptions, and adopting responsible borrowing practices, you can effectively leverage loans against credit cards to navigate financial challenges and achieve your goals. Remember to review your credit card’s terms and conditions, explore alternative financing options, and seek professional advice when necessary to make informed financial decisions.

Now if taking a loan is your specific goal, then why not apply for a personal loan from Airtel Flexi Credit? Get a personal loan without any collateral, with relaxed eligibility conditions, fewer documents, instant credit approval and more.

On the other hand, if you are looking for a credit card that offers you the maximum set of benefits and minimum hiccups, then look no further than the Airtel Axis Bank Credit Card. With this credit card, you now stand a chance to save up to ₹18,000 annually! In addition, you also get plenty of extra benefits such as discounts on food/grocery delivery apps, airport lounge access, discounts when you recharge or pay bills with the Airtel Thanks UPI app and much more.