Even though we are living in the digital era, we may still need cash from time-to-time. To withdraw money from an account through ATM machines, you can use your debit cards, as well as credit cards. However, the implications of withdrawing cash using a credit card are entirely different from withdrawing cash using a debit card. This article will guide you through those implications.
See also: What are the pros and cons of paying rent with credit cards?
Cash withdrawal with credit cards: Fact No. 1
Cash withdrawal with credit cards is a use-now-pay-later service. Apart from the amount you withdraw, you will also have to pay some fringe charges imposed on the cash-withdrawal-with-credit-card-facility.
Cash withdrawal with credit cards: Fact No. 2
The additional charge imposed on cash withdrawal using credit cards is known as cash advance fee. Banks in India typically charge between 2.5% to 3% of the withdrawn amount as a cash advance fee. This means, if you withdraw cash of Rs 50,000 using your credit card, you may end up paying up to Rs 1,500 as cash advance fee. So, you will ultimately pay Rs 51,500 to your bank. This charge will be added to your next month’s credit card bill.
Cash withdrawal with credit cards: Fact No. 3
Only five cash withdrawals from ATMs are free of charge. If that number exceeds, your bank will impose an ATM maintenance fee on cash withdrawals with credit cards.
Cash withdrawal with credit cards: Fact No. 4
Banks also charge a monthly percentage rate, typically from 2.5% to 3.5% per month on cash withdrawals with credit cards.
Cash withdrawal with credit cards: Fact No. 5
Interest on cash advances using credit cards is charged from the date of transaction till the payment is made. This makes the whole transaction a costly arrangement.
Cash withdrawal with credit cards: Fact No. 6
This transaction becomes more costly with late payment fee. Failure to make payments on time may attract a late payment fee in the range of 15-30% of the outstanding amount.
Cash withdrawal with credit cards: Fact No. 7
Credit card users enjoy reward points for dining, travelling, shopping, etc. These points can be redeemed for gift vouchers, cash gifts, air miles, etc. On credit card cash withdrawals, you don’t receive any reward points.
While you can withdraw cash with credit cards, most of your payments can be done online these days, eliminating the need for cash. You can even pay rent via credit card online.
FAQs
What is a cash advance fee?
Cash advance fee is the amount you pay your bank for every transaction you make using your credit card.
Can cash be withdrawn using a credit card?
Yes, cash can be withdrawn using a credit card.
Does withdrawing cash with a credit card affect my credit score?
While withdrawing cash with a credit card does not have a direct bearing on your credit score, the cash advance balance may be added to your credit card debt if it pushes your credit utilisation ratio too high. Credit agencies factor in the credit utilisation ratio to assign a credit score. However, failure to repay the credit within the specified time limit would reflect in your credit rating.
Can I avoid paying a cash advance fee?
No, on cash withdrawals using credit cards, a cash advance fee must be paid.
What is the credit card cash withdrawal limit?
The maximum amount you can withdraw using your credit card is a certain percentage of your credit limit. Banks in India typically allow cash limit between 20% and 40% of your total credit limit.
How to withdraw cash at an ATM using a credit card?
The process is same as withdrawing cash using a debit card. Insert the card into an ATM machine. Provide key details you are asked for and the card PIN.
Can I withdraw cash using a credit card from any ATM?
Yes, you can withdraw cash using a credit card from any ATM.
What is the difference between a credit limit and cash withdrawal limit in credit cards?
The credit limit is the upper range of amount you can spend using a credit card. The cash advance limit is the upper limit for withdrawing cash using a credit card.
| Got any questions or point of view on our article? We would love to hear from you. Write to our Editor-in-Chief Jhumur Ghosh at jhumur.ghosh1@housing.com |
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