The use of credit card is not just limited to cashless transaction and cash withdrawals. A credit card provider also offers loan on credit card which you can avail depending on your credit card limit. A loan on credit card is in a way a type of a personal loan. The difference is that it is pre-approved and does not require usual documentation as needed while availing a personal loan from the bank. Often, people confuse this feature with the cash withdrawal facility in a credit card. However, a loan on credit card is quite distinct from the typical cash withdrawal facility that all credit cards have.
The key difference between cash withdrawal on credit card and loan on credit card is the interest rate charged. The interest on a loan on credit card will be similar to or only slightly higher than that of a personal loan while interest on cash withdrawals tend to be much higher. Moreover, the limit on cash withdrawals in case of credit cards is much lower than that on the eligible loan amount on the credit card. Loan on credit card is suited for those times when there is an urgent need for cash and your cash withdrawal limit is insufficient to satisfy your requirements. Also, though cash withdrawals on credit card can meet your needs in the spur of the moment, but they come with a high interest rate and as such, are best avoided.
This is why it makes more economic sense to opt for a loan on credit card as compared to a cash withdrawal facility. A low interest rate, quick loan disbursement and no need of any documentation make this option one of the easiest and fastest ways to get cash in case of emergencies. Once approved, you will either receive a demand draft from the bank or a direct transfer to your bank account in a very short time.