How to withdraw money using your credit card?

Credit card is a bank-issued instrument, which has a pre-set credit limit and can be used for cashless transactions. While it is primarily used for cashless transactions, you can also transfer money from credit cards to bank accounts and withdraw the same using the credit card.

See also: What are the benefits of paying rent through credit card?

 

Let us understand how it works.

 

Steps to follow while withdrawing money from credit cards

• Visit an ATM.
• Insert a credit card into the ATM machine.
• Enter the PIN of your credit card.
• Enter the amount to be withdrawn.
• Collect cash and the credit card from the ATM machine.

 

Interest charged on money withdrawn using a credit card

If you avail the facility of withdrawing money using a credit card, you will have to pay interest on the amount withdrawn. The interest is a percentage of the amount withdrawn and differs from bank-to-bank.

 

Fees associated with amount withdrawn using credit cards

This facility of withdrawing money using credit cards attracts some fees. This is known as credit card cash advance fee. This is a percentage of the amount withdrawn and differs from bank-to-bank. This fee is levied every time money is withdrawn from an ATM machine, using a credit card, even if you withdraw money several times in the same day. The fee is highlighted in the next bill that has to be paid with the amount withdrawn and interest levied on the withdrawal.

 

Over the limit charge

It is recommended to know your credit card limits before withdrawing money using the same. If you withdraw money beyond your credit card limits, you will also be levied the over the limit charge in addition to fee and interest on the amount withdrawn.

Read also: What are the pros and cons of paying rent with credit card?

 

Money withdrawal using credit cards: Pros

• The biggest advantage of withdrawing money using credit cards is getting cash immediately without any paperwork.

 

Money withdrawal using credit cards: Cons

• Money withdrawal using credit cards attracts fees in every transaction.
• For every withdrawal, you need to pay an interest on the amount withdrawn, which is huge.
• If you do not pay the bill for cash withdrawn from credit cards or partially pay it, an interest will be charged on your total credit card bill and not just on the cash withdrawal.
• If you opt for cash advance through credit cards, you won’t get any reward points given by credit card companies.
• Withdrawing money from credit cards does not impact the credit rating score. There is an impact on the score if you default on the repayment.

 

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 using credit card.

 

FAQs

Is any paperwork required before withdrawing money from credit cards?

No paperwork is required while withdrawing money from credit cards.

Will it impact the credit score if money is withdrawn using credit cards?

There will be no impact on the credit score if money is withdrawn using credit cards. However, if you don’t repay in full and on time, there can be negative impact on the credit rating score.

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