Credit cards are a cool form of credit to have. It gives you the option to spend now and pay later. What more? You can even swipe it and withdraw cash too.
But when the payment date is due, we may often fall for the vicious ‘minimum amount due’ cycle and rest is converted into the ‘outstanding amount’, which is nothing, but sort of a loan. The outstanding amount of your credit card comes with a high rate of interest, as high as 3-5% per month, making it one of the easiest ways to eat up your savings and can lead to financial instability, if managed poorly.
What if you were told that there is a personal loan that functions exactly like a credit card; but at a cheaper rate? Personal Overdraft is what we are talking about. It is available at half the rate as compared to credit cards.
Overdraft facility, sometimes also referred as credit line OD, is a form of unsecured personal loan wherein your credit limit is sanctioned against your account and you pay interest only when you make a withdrawal. The functionality is quite similar to a Credit Card. Let us look at some of the key features and benefits of getting an overdraft facility –
Lower interest rate:
In an overdraft facility you pay half the interest rate as that compared to a credit card. This eventually results in a lower outgo towards the Loan. Also, an overdraft facility demands interest only on the amount withdrawn and not on the entire borrowed sum which is lying in your account.
Tenure:
By availing an Overdraft, you get higher tenure to repay without impacting your credit score. The tenure for a loan amount of Rs. 1 lakh can be set to 60 months in a Personal Overdraft Loan, while a credit card revolving credit facility generates a monthly bill cycle of 30-50 days.
End usage:
Credit cards are used primarily to meet quick one time expenses. If one withdraws cash from a credit card, it usually attracts high charges. On the other hand, you can use Personal Overdraft Loan to withdraw cash as and when required without heavy interest rates. Flexibility and choice of end usage remains with you.
No concept of EMI:
In addition to the above benefits, maintaining an overdraft account also improves your credit profile as there is no concept of EMI and due date. Thus, this reduces the chances of defaulting.
Why choose Personal Overdraft facility?
Zero maintenance charges: There are no additional charges demanded for maintaining an overdraft account.
No diminishing line of OD:
It does not have diminishing line OD, which means the approved limit remains constant throughout the loan tenure and you can withdraw up to the amount of loan sanctioned.Instant loan approval:
Applying for a loan and getting it approved takes only up to 24-36 working hours. Once the Basic Documentation is complete, a pre-set line of credit is approved.
Flexible Repayment:
With Personal Overdraft, one can enjoy convenient withdrawal and repayment as many times as one wants within the tenure of loan. wishes to.
Opting for an Overdraft facility is one of the best options when you are unaware of the amount you would require and when. Like any other personal loan, Personal overdraft also charges a lower interest rate and is collateral-free.
