Credit Card Cash Withdrawal: In this era of online shopping, the demand for credit cards is also increasing rapidly. It not only solves your money problems in difficult times, but on using it, users also get many types of offers, discounts and reward points etc.
Some credit cards also offer reward points and cashback on purchasing fuel. Due to all these facilities, the trend of using credit cards is increasing day by day.
But do you know that among all these features available on credit cards, there is one feature on which banks charge you a hefty fee. If you use this feature unknowingly, you may have to regret it later.
Cash Advance Feature
With the help of the cash advance feature of the credit card, you can go to the ATM and withdraw cash from your credit card just like a debit card. How much cash you can withdraw from the credit card depends on the limit of your card. Most banks allow you to withdraw 20 to 40 percent of the credit card limit as cash. But is it beneficial to withdraw cash from the credit card using this feature?
How correct is it to withdraw cash from a credit card?
o the answer to this question is absolutely no. Because there are more disadvantages than advantages of withdrawing cash from a credit card. Its only advantage is that your cash requirement is met in times of emergency. Apart from this, there is no other advantage of this facility. The biggest reason for this is that on withdrawing cash from a credit card, you neither get the benefit of interest free credit period nor reward points.
To put it simply, the interest-free grace period that you get after shopping is not available in this. Not only this, a hefty interest is also charged on the cash withdrawn.
Fees and interest rates
Every time you withdraw cash using a credit card, a fee is charged. Usually, it ranges from 2.5% to 3% of the transaction amount. Cash withdrawals also attract a transaction fee. This fee is charged from the date of transaction until the payment is made. Interest on the credit card starts accruing from the day of cash withdrawal. It can range from 2.5% to 3.5% on a monthly basis.
ATM Charges
Nowadays banks offer only a few ATM transactions for free. Fees are charged for more transactions. So if you use your credit card more often to withdraw cash, you may have to pay this fee as well.
Late Payment Fees
If you do not pay the full amount of cash withdrawn from the credit card, then a late payment charge is levied on the outstanding balance. Its rate can be from 15 to 30 percent.
Impact on CIBIL score
If you withdraw cash from your credit card frequently, it can also affect your CIBIL score. Therefore, before deciding to withdraw cash from your credit card, consider all these things.
