Since the beginning of this year, banking sector has seen many collapses back to back. All this has been causing inevitable layoffs, wage freezes, or other economic shocks. Even the US govt is on the verge of debt default.
Such economic stress can result in the common man too needing loans if financial problems arise, amid the already high inflation and unemployment.
That is where pre-approved digital loans, like a loan against an IDFC credit card, can assist current cardholders in paying off debt and also for other purchases/expenses. These loans also have unique benefits and drawbacks that must both be considered before coming to a conclusion.
Consider the following advantages and disadvantages of using credit cards after obtaining one by going through the IDFC wealth credit card application process before submitting an application for a credit card loan.
Credit card loans may have the quickest processing and payout times of all the available lending options.
Fast disbursements are accessible to qualifying credit cards that satisfy the standards, and they may occur hours after a credit card application. Since this loan has already been pre-approved, no extra paperwork is required. Additionally, some credit card companies assert that they can transfer money in just a few minutes. If someone meets the requirements for the loan, all they need to do is submit an online application using online banking, or they can get help from the customer service department of the credit card provider. The loan amount can either be deposited to your account or withdrawn as a demand draught at your discretion.
It effectively replaces conventional financial procedures.
In any circumstance, IDFC credit card loans are a reliable source of credit, but they are particularly useful when faced with limitations, a lack of lending personnel and hours, restrictions, and an unsteady economy. One of the quickest payouts, ease of loan application submission by phone banking or internet banking, and pre-approval status are just a few benefits of credit card loans. Current IDFC wealth credit card holders who are disqualified for alternative lending choices or who have failed to qualify for them may, if they are qualified, apply for a credit card loan using a credit card in the event of a financial emergency, liquidity mismatch, or debt consolidation. Make sure to carefully consider your options by contrasting interest rates, loan conditions, processing costs, and the size of the loan you are seeking before deciding on a lender.
The maximum loan payback duration is five years. There are several loan options available to the borrower, each with an acceptable return period and associated EMIs, and maturities ranging from six months to five years.
Though longer terms result in smaller monthly payments, keep in mind that they may also result in higher overall interest rates when choosing a loan term. As a result, it makes sense to select a loan term that is in line with your ability to make payments. Paying your credit card bill in full after the due date will incur hefty financial penalties in the form of high interest rates and a late payment fee because your loan EMI and IDFC credit card account are linked.
The interest rates charged on credit cards can be influenced by a number of variables in addition to personal loan interest rates, such as your credit score, the type of card you have, your repayment history, where you work, and others. The interest rates on your credit card loan are typically at least 1% to 2% higher than the interest rates on personal loans that are accessible to people with the same credit profile, even though credit card issuers may impose noticeably higher IDFC wealth credit card interest rates during periods of economic uncertainty, like the one we are currently experiencing. Customers should compare the interest rates on credit cards with those of any other loan products they may be considering, such as digital top-up house loans, rapid personal loans, and personal loans issued for COVID 19.
When a loan against a credit card is received, the cardholder’s credit limit is temporarily restricted up to the loan amount since credit card loans are only permitted up to a predetermined limit that has been approved by the credit card issuer. As a result, the cardholder is unable to use their credit card.
However, the credit limit will gradually increase if you make on-time payments on your invoices. You may also be able to keep making substantial purchases while retaining your credit limit if some credit card providers authorise this loan for a higher sum than the card’s credit limit. However, bear in mind that a credit card provider wouldn’t provide you this option without taking things like your ability to pay the amount and past payment behaviour into account.
has an impact on your capacity to withdraw cash using a credit card. Unless otherwise specified, cash withdrawals from credit cards are permitted up to a predetermined limit that, in most cases, represents a portion of your entire credit limit. When a loan is obtained using an IDFC credit card, some credit card companies expressly forbid the maximum cash withdrawal limit, while others do not. Having a credit card option available could be helpful in resolving financial troubles, even though using a IDFC wealth credit card to withdraw money from an ATM should frequently be avoided due to the high costs and related high interest rates.
It is undeniably true that applying for a credit card and utilising it to borrow money makes it one of the most favourable sources of credit, particularly in difficult times like the current epidemic, which is distinguished by unstable economic conditions, constrained work hours, and a lack of personnel for lenders. To be cautious, it’s important to start by researching other financing options, like quick loans for online borrowers and digital top-up mortgages. These loans may have interest rates that are lower than credit card interest rates and may be disbursed in the same amount of time as IDFC credit card loans.