Credit Card Cash Withdraw: Nowadays the use of credit cards has increased a lot. It is not only convenient for shopping, but can also be useful for withdrawing cash in an emergency. However, it is very important to know some important terms and conditions before withdrawing money from a credit card, so that you do not have to suffer financial loss.
Cash Advance Fee
When you withdraw money from a credit card, the bank charges a cash advance fee, which is usually 2% to 3% of the withdrawn amount. This fee is added to your credit card statement. For example, if you have withdrawn ₹10,000 and the bank charges 3% cash advance fee, you will have to pay ₹300 extra.
Calculating Interest Rate
Interest is charged immediately on withdrawal of money from a credit card, while interest on purchases is charged after some time. This interest rate can be 24% to 48% per annum, which is applicable from the day of withdrawal. If you do not pay on time, the burden of interest can increase even more.
No grace period benefit
Usually, there is a grace period of 20 to 50 days on purchases made with a credit card, during which you do not have to pay interest. But this grace period does not apply when withdrawing cash.
Cash Limit
Every credit card has a cash limit, which can be anywhere from 20% to 40% of your total credit limit. Withdrawing more than this amount may result in a failed transaction.
Impact on Credit Score
If you do not repay the cash advance on time, it can affect your credit score. A bad credit score can cause problems in getting a loan or a new credit card in the future.
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