Should you withdraw cash using credit card? Read this to find out
India has over 41 million active credit cards. This plastic money has revolutionised the way people borrow. Almost all the credit cards come with advance cash feature but the limit may vary from user to user based on their profile. The cash advance feature allows a Credit Cardholder to withdraw cash from any bank ATM. The features allow a user to get cash without any documentation or asking someone else for the same. While withdrawing cash from an ATM using the credit card, one should keep in mind a few things listed below:
Credit Card: Interest-free period
To your surprise, there isn't any interest-free period for cash withdrawal. The charges start accruing from the day one till it’s paid in full. (Representative image: Pixabay)
Credit card cash advance charges
It's known to all that your credit card comes with certain interest and fees. If you withdraw cash using your credit card, you will be charged every time you withdraw cash using it. The charges range from 2.5% to 3% of the transaction amount, subject to a minimum amount of Rs 250 to Rs 500, and is reflected in your monthly bill. (Representative image: Pixabay)
Finance charges on credit card cash withdrawal
Like any other credit card transaction, cash withdrawal also attracts finance charges besides the advance charges. The charge is levied from the date of the withdrawal up until the repayment has been done. (Representative image: Reuters)
Credit Card: Late payment fee
If you are paying the amount in parts, get ready to pay late payment fee as well. The late payment charges are levied on the outstanding balance and the amount could be between 15% and 30%. (Representative image: Reuters)
Credit Card: Reward Points
Most credit cards have reward features. So, whenever you make a payment using your credit card, you accumulate some reward points. However, when you withdraw cash using Credit Card, you don't get any reward point. Therefore, you should use your credit card for cash withdrawal only in an emergency situation where you are left with no other option. (Representative image: Reuters)