CREDIT CARD LOANS
It is possible to get a loan from your credit card by withdrawing cash from the card. This can be done at any ATM where you would normally get cash using your debit card. The money that you withdraw in this way will be added to your credit card balance. Then will be taken into account when your minimum repayment is calculated.
Advantages Of Taking Out A Credit Card Loan
The money that you want to borrow will already be available as long as you have enough available balance on your card. This means that you do not have to make a separate application for a loan. Which eliminates the chance that you will be turned down.
There is also more flexibility in terms of the repayments that you make towards the loan. As long as the minimum payment on the card is made then you can pay as much or as little above this as you want. It is in your best interests to pay the loan off as quickly as you can though so that you pay the least amount of interest.
There may be some occasions where you would normally use your credit card but the merchant does not accept card payments. On this occasion a credit card loan may be a good choice. You can also use the money to give your bank account a boost when you just need a little bit of extra cash.
Things To Be Aware Of
The rate of interest that is charged on cash withdrawals is almost always higher than it would be for normal purchases. This means that it will cost you more to pay the loan back. There may also be a transaction fee based on the amount that you withdraw.
Your credit rating may also be affected by withdrawing cash from your credit card. This may not be so much of an issue if you only do it now and again but it can have a negative impact if it is done on a regular basis. However on the up side is there is No Credit Check with these types of loans if you already have the credit card.
Application Process
There is no need to make a separate application for a loan from a credit card that you already have as you will be able to withdraw the cash whenever you want. However, some card companies do put a limit on the amount of available balance that can be withdrawn. This is something that you may want to check with your card company.
Once you know how much you have available to withdraw then this money can just be withdrawn as needed. However, as this is quite an expensive way of borrowing you should try not to become too reliant on it. Only withdraw the money that you actually need rather than the whole amount you have available.
Interest Charges And Repayments
If you are considering taking out a credit card loan then you should have a plan in place for how the loan will be repaid. You will not have to discuss this with a lender but it is worth doing for your own peace of mind. When you are making this plan you should try to repay the loan as soon as possible to reduce the amount of interest that you have to pay. One thing to think about is that if you were to apply for a loan from another lender. Then you would have to find the money from somewhere to make this repayment. If this money is paid onto your credit card instead then the loan will be repaid quicker.
To Conclude
Lenders have different policies when it comes to paying off balances where there are two different rates of interest. Some lenders will use the money that they receive from you to pay off the lower rate of interest first. If you already have an outstanding balance from other purchases that you have been made. Then these will be paid off first which means that you will be accruing interest on the cash withdrawal. This is not something that all lenders put into place. Therefore it may not be something that affects you. You may find information about the order that your payments are allocated on your credit card statement. Or you could call your lender to clarify before you make the withdrawal.
