Credit Card Cash Withdrawal: Most banks allow withdrawal of 20 to 40 percent of the credit card limit in cash.
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 problem 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 card, there is one feature on which banks charge you a hefty fee. If you use this feature unknowingly, you may 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 like a debit card. How much cash you can withdraw from the credit card is decided according to the limit of your card. Most banks allow 20 to 40 percent of the credit card limit to be withdrawn as cash. But is it beneficial to withdraw cash from the credit card using this feature?
How correct is it to withdraw cash from the credit card?
So the answer to this question is absolutely not. Because there are more disadvantages than advantages of withdrawing cash from the credit card. Its only advantage is that your cash requirement is fulfilled at the time of emergency. Apart from this, there is no other benefit of this facility. The biggest reason for this is that when you withdraw cash from a credit card, you neither get the benefit of interest free credit period nor reward points. In simple terms, the interest free grace period that you get after shopping is not available in this. Not only this, a heavy interest is also charged on the withdrawn cash.
Fees and interest rate
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. Transaction fee is also charged on cash withdrawal. This fee is charged from the date of transaction till payment is made. Interest starts being charged on it from the day of withdrawing cash from the credit card. It can be from 2.5% to 3.5% on a monthly basis.
ATM charge
Nowadays banks offer only some ATM transactions for free. Fee is charged if there are more transactions. Therefore, if you use a credit card more often to withdraw cash, then you may have to pay this fee as well.
Late payment fee
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.
Effect on CIBIL score
If you withdraw cash from a credit card repeatedly, then it can also affect your CIBIL score. Therefore, before deciding to withdraw cash from a credit card, you should consider all these things.
