Yes, it is possible to hire a credit card loan, without compromising your limit. To get a credit card loan, you need to:
- check the availability of the service at the bank;
- apply for the loan service;
- wait for the credit analysis;
- read and sign the service contract;
- receive the release of the money.
The credit card is the most used form of payment in the country. Because it has facilities such as installments and the convenience of only starting to pay next month, the credit card is used by 52 million UK residents users according to the SPC (Credit Protection Service).
But what many of those millions of people don't know is that it is possible to hire a loan service with a credit card, and resolve some financial issues without compromising your limit.
If you are negative and want to understand how the credit card works for your situation, we recommend reading the article, “How to make a credit card for negative: what is the best option and where to get it?”.
To learn how credit card lending works, keep following this post.
We have separated the main information to help you identify whether or not it is an option for you. Good reading!
How does credit card loan work?
The credit card loan works like a conventional personal concession, but it is linked to a credit line associated with this type of electronic payment.
The transaction is made without compromising your limits, so it does not affect the user's consumption habits.
Despite the ease of hiring, it is necessary to pay attention to your conditions.
The credit card already has one of the highest interest rates on the market and having a loan attached to it can generate significant new fees.
That is, if you are considering applying for a loan of this type remember to apply the techniques of how to control spending on your credit card. They will be more important than ever!
In addition, it is not every financial institution that offers this service. Therefore, you need to know your bank's policies and the benefits offered.
How to make a credit card loan?
As we said, the service is not available at any creditor institution. So the first step in getting a credit card loan is to check if your bank offers this type of concession.
1. Check if the option is available
Consult the website, application, ATM or even your agency's manager. If so, follow the next steps.
The credit card loan application follows conventional standards, so you just need to:
- access one of the bank's official communication channels (branch, internet banking, call center via phone),
- fill in the registration data,
- send the requested documents.
If your credit card is linked to a checking account, it is very likely that you already have a pre-approved credit. See this possibility as well.
Read too: What is overdraft: how does it work and why so high interest rates?
3. Credit analysis
Once this is done, the bank will analyze your financial situation. Among the factors that will “weigh” in the decision are:
- payment habits,
- credit score,
- consumption profile,
- debts, among others.
All of this will be analyzed to verify whether or not you are able to afford the installments of this type of loan.
Don't know what a credit score is? Check the video below for a simple explanation of this valuable indicator for you and the market.
4. Signature of the contract
If your profile meets the company's criteria, the application will be approved and a service admission contract will be issued.
Remember to read the loan conditions carefully, considering:
- interest rates,
- percentages, and so on.
5. Release of money
Once the contract is signed, the requested money will be made available in your checking account.
The term is defined by the financial institution itself, so it can vary from one bank to another.
How is the loan paid?
The payment of the installments can be done in several ways, but each contract will have its discharge forms explained in the document.
Discounts through automatic debit and the use of a credit card are some of the many payment possibilities offered by the bank.
In case of more specific doubts, direct contact with the financial institution is mandatory.
Is it possible to pay the loan installments using a credit card?
Yes, however, there are some issues to be aware of.
The first point is that the company that will receive payment for the installments cannot be the same company that issues the credit card. I.e, the discharge cannot be made with the same card linked to the credit application.
This is because, in a simple logic, using the credit card to pay the loan installments is the same as transferring the responsibility to the card issuer.
In other words, you would have the installment collector pay for them. This would not be feasible.
The second point to be considered is that not all types of credit cards carry out this type of transaction.
Some more basic models, for example, only authorize this type of payment for utility bills, such as electricity, gas, water, telephone and cable TV.
Other more robust models allow all types of barcode operations, as long as they are effectively paid by the due date.
Therefore, it is possible to use the credit card as a form of payment, as long as it is not the same as the credit line available and it is enabled for this type of operation.
What fees and charges are involved?
As we said, when we use the credit card to pay the loan installments, it is the issuer of the document who bears this cost until the day of payment of the invoice effectively arrives.
To provide this type of financial support, it is very common for an interest rate to be charged.
As in this case there are no guarantees that the customer will honor the payment of the invoice, the amount of this charge is quite significant.
In addition to this fee, there is also the IOF rate (Tax on Financial Operations) that is levied on the operation on a daily basis.
This ends making the account and the value of the individual installment more expensive.
That is, if the payment is not well organized, new financial problems may arise.
Is it worth paying the loan using a credit card?
I don't believe this is the best option for you. Considering the percentage charged by the IOF tax, even if the issuer charged a low rate, paying the loan with a credit card would be advantageous.
In addition to installment value and related fees, which are charged until the invoice matures, in case of delays, the revolving credit card interest.
Thus, before signing the loan contract, it is necessary to evaluate the conditions presented well and have a careful personal financial planning.
At HR Consultant UK we created a model of complete and free spreadsheet for personal financial control.
Download your Personal Expenditure Control Worksheet and start filling it out.
When to do a credit simulation?
Hiring a credit card loan requires responsibility and a lot of organization.
Just as it can be the solution to pay off an old debt or an aid to make a dream come true, this type of credit can generate new tasks of being poorly managed. For this reason, take the time to:
- research your options,
- know the alternatives and conditions of other banks,
- prepare your financial routine for significant changes.
If there are still doubts, it is valid that you ask credit simulations in different financial agents, in order to identify the most suitable proposal for your real needs.
The Central Bank also makes available average interest rates of this type in all banks that offer it.
But it is worth mentioning that these values may vary according to the client's profile, as well as their relationship with the institution.
In many negotiation situations, it is possible to find offers with lower interest rates and better payment terms.
Therefore, taking out a credit card loan is a possibility that can solve your tasks, but that requires research and a lot of discipline to avoid new financial problems. Always consult a professional who can guide the best decisions. And search for other options as well.
How to escape the credit card loan?
A credit card loan can become a big financial trap, so looking for alternative solutions may be a better choice.
If you works or owns a business know that the organization can contribute a lot to help its employees pay off their debts.
Taking care of the financial health of employees will guarantee:
- more productivity;
- lower turnover rates;
- less stress at work, and bring many other benefits.
So, how about taking a super strategic tip to the company's management?
HR Consultant UKy is a system that allows companies to adopt the salary model on demand.
This is a corporate benefit offered to employees, which aims to:
Consequently, reduces company expenses with layoffs and labor agreement.
Integration is quick and simple. As soon as your employees register, they can make withdrawals immediately.
Talk to an expert and discover even more gains that your company can make by offering a benefit like HR Consultant UKy.
Still in doubt? So, check out this other related article, which has all the tips to help your employees not get into debt.
Or access, “Personal online loan: what it is, how to use it and credit benefits!”.
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