Think Before You Swipe: Why Taking a Loan on Your Credit Card Can Be Risky

Credit cards have become a financial lifeline for many today. From shopping sprees to online payments, they make transactions effortless while offering attractive discounts, cashback, and reward points. However, what often goes unnoticed is that credit cards are essentially a form of borrowing. Used wisely, they help build credit and manage expenses, but misuse or overdependence can lead to serious financial trouble.

Credit Card Loans : A Quick Fix or a Costly Trap?

One of the biggest advantages that attracts people to credit cards is the facility to take an instant loan against them. It feels like an easy solution during emergencies when funds are short. But this convenience often comes at a heavy price. Credit card loans carry high interest rates and several hidden charges that can turn a small loan into a major liability if not managed properly.

Hidden Costs You Might Miss

Unlike regular credit card purchases where you enjoy an interest-free period, loans on credit cards start accruing interest from day one. There’s no grace period or partial payment option, you’re required to pay fixed EMIs every month. And these EMIs come with steep interest rates ranging from 18% to 24%, sometimes even going up to 50% if late payment fees, processing charges, or prepayment penalties apply.

Why It’s Riskier Than It Looks

Many people assume that since the loan is taken on their existing credit card, it’s safer or easier to manage. But in reality, it can quickly snowball into unmanageable debt. Missing even a single EMI can affect your credit score and increase your overall liability due to compounding interest and penalty charges. Moreover, since credit cards are unsecured, banks compensate for the risk by keeping interest rates high.

Personal Loan: A Smarter Alternative

If you genuinely need funds, opting for a personal loan is often the wiser move. Personal loans usually come with lower interest rates and clearer terms. Banks and financial institutions also offer flexible repayment tenures, giving you breathing space to plan your finances. Unlike credit card loans, personal loans typically have fewer hidden fees, making them a more transparent and predictable option.

How to Stay Financially Safe

• Use credit cards only for planned spending and emergencies.
• Always pay your bills in full before the due date to avoid high-interest charges.
• Compare personal loan offers before opting for a credit card loan .
• Read all terms and conditions carefully to identify hidden charges.
• Maintain a strong credit score to get better loan offers in the future.

Credit cards can be your best friend or your worst enemy, it all depends on how you use them. Taking a loan through your credit card might feel like a quick fix, but it often comes with hidden traps that can hurt your finances in the long run. Before you swipe for a loan, think carefully and explore safer, more affordable alternatives.

Disclaimer: This article is for informational purposes only. Please consult your bank or financial advisor before making any loan-related decisions.