It’s 2022 and already the third covid variant has arrived, necessitating emergency funds in hand to take care of uncertainties in life. Though many people make use of their savings to meet urgent requirements, others face an acute shortage of funds to meet emergencies. Availing loan during such difficult times is a better option than digging out savings. There are many short-term loan options like instant cash loans, credit card cash withdrawals, which give the borrowers various options to choose from.
Though short-term loans are unsecured by nature, they tend to differ across parameters. Let us understand the important features of credit card withdrawals and instant cash loans, to understand which is better suited to suffice funding needs.
Credit Card Cash Withdrawal vs. Instant Cash Loan – Which Is Better?
Key Features
Credit Cards Cash Withdrawal
Instant Cash Loan
Repayment Period
Credit card cash withdrawals entail an interest-free period, during which the card holder’s outstanding interest does not get charged
Flexible repayment period ranging between 6 to 24 months.
Loan Amount
As per the borrower’s existing sanctioned credit limit and credit history
Rs. 10,000 – Rs. 2 lakhs, few lenders up to 5 lakhs.
Purpose of loan
Easy credit access for funding various expenses within the credit sanctioned limit
Immediate funding for emergency purposes with no restrictions for utilizing it only for a specific reason.
Eligibility
Both salaried and self-employed individuals are eligible
Both salaried and self-employed individuals are eligible
Approval Process
Approved and disbursed within a few days
Approved instantly and disbursed within business hours
Interest Rate
Higher rate of interest as compared to instant cash loans. The interest amount gets accumulated if the outstanding amount is not paid regularly on a monthly basis
Low rate of interest as compared to credit card cash withdrawal.
Documentation
Mandatory KYC documents
Mandatory KYC documents
Eligibility Criteria
A good credit score and credit history
A stable income/salary and KYC documents
EMI Facility
Available
Available
Rewards/offers
Available
Not applicable
Insurance Protection
Available
Not applicable
Hidden Charges
Applicable
Not present
Intensity of Fraud
High
Varies depending upon the credibility of loan apps
Which is the better option - Credit Card Cash Withdrawal vs. Instant Cash Loan?
That would be dependent on the reason for availing of a personal loan in the first place, apart from the loan terms most feasible. The borrower has to compare the instant loan amount that can be availed, rate of interest, loan tenure, penalty charges, or hidden costs between the two options. Credit card cash withdrawal is suited for those borrowers who need small loan amounts and can afford to pay the credit card outstanding before the due date. Otherwise, they would end up paying a high interest plus hidden charges. Instant cash loans are suited for borrowers who have a higher loan requirement as compared to credit card cash withdrawals.
Getting clarity between credit card cash withdrawal and instant cash loan is thus important. However, not all borrowers can avail of credit card withdrawals, for them, apps like HeroFinCorp instant cash loan app -100% digital loan facility is a good option. The app provides customized instant cash loans at an affordable rate of interest, enabling borrowers to meet their immediate cash requirements
Frequently Asked Questions
What is a credit card cash withdrawal?
A credit card cash withdrawal allows you to withdraw cash using your credit card up to a certain limit. The withdrawn amount is part of your existing credit limit and comes with an interest-free period.
What is an instant cash loan?
An instant cash loan is a short-term loan that provides immediate funding for emergency purposes. It usually ranges from Rs. 10,000 to Rs. 2 lakhs, with some lenders offering up to Rs. 5 lakhs.
What is the loan amount limit for instant cash loans?
Instant cash loans typically range from Rs. 10,000 to Rs. 2 lakhs, with some lenders offering up to Rs. 5 lakhs.
What is Difference between Cash Credit and Overdraft?
Overdraft (OD) allows withdrawing more than the account balance up to a set limit, primarily for short-term liquidity. Cash Credit (CC) offers businesses access to funds up to a sanctioned limit for working capital needs, secured by business assets. Overdraft and Cash Credit are both credit facilities provided by banks, each serving distinct purposes.
Katyaini is a finance expert with a focus on the non-banking financial sector, bringing over 8 years of experience in NBFC. She specializes in simplifying complex financial concepts for readers, helping them navigate the NBFC landscape. Outside of work, she is passionate about travelling.
