Prepay Credit Card Loan | ICICI Bank Loan Prepayment Guide

Managing your finances wisely means making early payments or settling debts before their due dates. If you have taken a loan on your Credit Card (known as Loan Against Credit Card or Credit Card Loan or Loan on Credit Card), can you pay it back early? The answer is yes. This blog post will cover everything you need to know about Credit Card Loan pre-payment, its effects on your finances and how good planning can help you.

Understanding pre-payment of Credit Card Loans

A Credit Card Loan is simply a loan offered by the lender against your existing Credit Card. You don’t need to provide documents to get this loan approved. ICICI Bank provides this loan to select Credit Cardholders based on their eligibility.

You can pre-pay your Credit Card Loan by paying off the entire loan amount before the scheduled date. ICICI Bank lets you pre-pay your loan with a nominal fee, which is mentioned in the Key Facts Statement. That’s why it’s a good idea to check the pre-payment rules and charges in the Key Facts Statement as well as the repayment schedule and terms & conditions.

How does Credit Card Loan pre-payment work?

Here is how you can pre-pay the loan taken on your ICICI Bank Credit Card:

1. Check Your Outstanding Balance

• Log into ICICI Bank Net Banking or the iMobile app
• Go to the ‘Manage Card’ section under your Cards portfolio. To view the EMI details of your Loan on Credit Card, select ‘EMI Summary’.

2. Choose Pre-payment Option

• Under ‘Manage Card’, select ‘EMI Closure’ for pre-payment or foreclosure
• Then, choose the ‘Personal Loan on Credit Card (PLCC) EMI’ or any other EMI that you wish to close.

Review the Pre-payment Charges

• Depending on your loan terms, a nominal charge may apply. This varies across banks. Refer to the Terms & Conditions for complete details.

4. Pre-payment Charges Billed

• Pre-payment charges, if applicable, are billed directly to your Credit Card. To clear your Loan on Credit Card, you need to pay the billed amount before the due date to avoid any additional interest.

You can also pre-pay or foreclose the loan on your Credit Card by calling ICICI Bank Customer Care on 1800 1080 from your registered mobile number. Alternatively, you can write to customer.care@icicibank.com mentioning the last four digits of your Credit Card from your registered e-mail ID.

Benefits of pre-paying your Credit Card Loan

Here are the benefits of pre-payment of Credit Card Loan:

• Save on Interest: The sooner you repay, the less interest you’ll pay over the loan period. This helps you save more.

• Clear Your Loan Sooner: Early repayment allows you to settle your dues faster. This gives you the peace of mind that comes with having one less financial commitment.

• Strengthen Your Credit Score: Regular and proactive repayments show lenders that you’re a reliable borrower. This can help improve your credit history.

• Regain Full Credit Limit: Once the loan is closed, your full Credit Card limit becomes available again. This gives you more spending flexibility for future needs or emergencies.

Let us understand through an example:

Amit took a loan of ₹ 1 lakh against his Credit Card for 12 months. 6 months later, he received a bonus and used ₹ 50,000 to pre-pay the loan. This reduced his interest cost and unlocked part of his credit limit for future use.

Impact of pre-payment on loan repayment and credit score

Pre-paying your Credit Card Loan can make a big difference to your repayment journey. By bringing down the outstanding balance, you also cut down the total interest you will pay. The sooner you pre-pay, the more you save on interest. You can also decide whether to reduce your monthly EMI or close the loan sooner, whichever suits your budget.

Credit Card pre-payment can also positively affect your credit score. Timely and proactive repayments are seen as signs of responsible credit behaviour. When you reduce your debt burden, your credit utilisation ratio improves, which is one of the key factors in credit score calculation.

Conclusion

A Credit Card Loan can be prepaid and if done correctly, it can prove to be a wise financial move. It reduces the interest due, lets you pay off your debt sooner and even improves your credit score. Make sure that you know the pre-payment fees, understand the loan agreement and pick the right time for the payment.