Credit cards indeed have become one of the most crucial financial instruments. With enhanced benefits and features, credit cards now are more a kind of necessity than a luxury. Besides allowing you to make the payment at different offline and online merchant stores, credit cards also enable you to withdraw cash from ATMs, just like debit cards. However, credit card cash withdrawal is not very simple. There are various details that you must factor in before you opt for credit card cash withdrawal. Here in this blog, we will assist you in finding out all you need to know about credit card cash withdrawal.
What is meant by credit card cash withdrawal?
Technically, cash withdrawal through a credit card is addressed as credit card advance. With this facility, you can withdraw cash from the ATM through a credit card. However, there are specific points linked with credit card cash withdrawal that you should consider:
∙ Major feature of credit cards is to conduct credit card transactions. Cash withdrawal is only an add-on feature offered by the lenders.
∙ You, as a user of a credit card, can withdraw cash through a credit card just up to a specifically allowed limit.
∙ Maximum credit card limit for cash withdrawal might differ from creditor to creditor.
∙ You must pay additional fees along with interest on the withdrawn amount through a credit card.
∙ Not all credit card issuers or banks provide a credit card cash withdrawal facility.
Credit card cash withdrawal charges
As credit card cash withdrawal is not the basic but an additional feature provided by banks, you must pay additional charges upon withdrawing the cash through your credit card. Such additional charges are called credit card advance charges. Each time a user withdraws the cash using a credit card, a portion of the amount withdrawn is levied as cash advance fees.
∙ May it is a Uni credit card or any other bank credit card, a cash advance fee of up to 3.5 percent of the withdrawn amount is levied along with finance charges of as high as 52 percent p.a.
∙ Cash withdrawal charges are added to your outstanding dues for the upcoming month and are reflected in your credit card billing cycle.
∙ Cash withdrawal fee is charged along with finance charges applied on the amount withdrawn. This amount is levied from the withdrawal date until the withdrawn amount is repaid in full.
∙ It is crucial to remember that even if you conduct multiple cash advances through a credit card in a single day, you will require paying the cash advance charges for each transaction that you conduct, depending upon the withdrawal amount.
Are you wondering if there is any credit card with no charges on a cash advance?
Well, there is. Paytm HDFC credit card has no fees attached to cash withdrawal on an amount of up to Rs 10,000.
How many finance charges are charged on credit card cash advance?
Credit card cash advance attracts finance charges. These charges may differ anywhere between 20 – 52 percent p.a. based on the creditor. The actual interest rate charges differ from one bank to another and from one credit card to another. It is necessary to remember that details linked with credit card withdrawal are shared with the card user during the issuance of a credit card. Hence, it is recommended for you to go through all terms & conditions before purchasing a credit card. This will allow you to avoid unwanted surprises later.
How can you withdraw cash through credit cards?
Withdrawing cash through credit cards is very simple. Like you withdraw cash through debit cards, you can withdraw cash through credit cards. You just need to visit the nearest ATM, insert the credit card into the ATM machine and follow step by step instructions. However, there are specific points you must remember:
∙ Credit card advances can be made at any bank ATM, regardless of the credit card issuer.
∙ Few banks might levy any additional charge for withdrawing the cash from another financial institution’s ATM.
∙ Specific banks might even have a maximum or minimum limit set on the amount that can be withdrawn through the credit card.
∙ You should be aware of the cash limit available on your credit card before you withdraw cash from the ATM to prevent overuse of the cash limit.
∙ If you withdraw outside your allowed cash limit, then your bank might charge additional charges for the over limit and finance charges on the same.
Does the withdrawal of cash through a credit card impact your credit score?
While there might be myths that cash withdrawals impact your credit score in a negative way, the actuality is cash withdrawals have no impact on your credit score. However, as there are heavy finance charges incurred on cash advance withdrawal along with additional fees charged on a regular basis, it might become tough for you to easily keep up with your monthly repayment. Eventually, on failure to make the payment of monthly credit card dues or minimum due amount, your credit score might be impacted and reflect negatively upon your report. As a solution, if you opt for making timely payments of your card dues, your credit score will not be impacted regardless of the number of withdrawals you make.
Credit card advance benefits
Here are mentioned some of the crucial benefits of making a withdrawal of cash through a credit card –
∙ Withdrawal of cash through credit cards offers instantaneous access to liquidity. With easy ATM availability, you can withdraw cash any time and from any place through your credit card.
∙ Unlike any other personal loan sources, withdrawing cash through credit cards does not need any documentation.
∙ If you consistently spend and have a good repayment pattern, zero records of missed or late payments and a good financial background, you can easily place any application for credit card limit enhancement on your credit card.
While it is possible for you to withdraw cash through your credit card, you must still do it when it is urgently required, and there is no other alternative. If there is no urgency, you must not make cash withdrawals as you must incur massive charges in the form of finance charges and cash withdrawal fees. Moreover, cash advances do not come with an interest-free period, which makes them even more costly.