Credits are a part of our daily life. And this all began when people learned about the many advanced features of credit cards. Most credit cards have benefits like – rewards points, discount coupons and seasonal offers. Such benefits enhance your shopping experience and help you spend wisely.
Besides the reward offers, credit cards also provide users with a cash withdrawal facility. But before using this feature of your credit card, you should know banks impose credit card cash withdrawal charges.
So to withdraw cash from a credit card, you have to bear the hefty credit card interest rates and withdrawal charges.
The cardholder can pay the additional charges in the monthly credit card bill payment. Let’s discuss the credit card cash withdrawal process in detail.
Credit Card Cash Withdrawal
Before we discuss the details of cash withdrawal charges and interest on credit cards, you need to understand what withdrawal cash from credit cards is.
Credit card cash withdrawal is a facility offered by credit card issuers with which the user can withdraw cash from their credit card account. And for this, the card issuers charge you with interest and some additional charges.
The withdrawal limit of your credit card is based on your credit limit. It means you can’t withdraw more than the provided limit.
Once you withdraw an amount, the same will be added to the credit card minimum due amount at the month’s end. There are two options:
- You can either pay the minimum due and let the balance accrue interest in the next month’s cycle
- You can pay off the withdrawn amount plus additional charges
Different banks have different rules and conditions when offering credit card cash withdrawals. Understand all the terms and conditions of the credit card withdrawal to avoid any trouble in the future.
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When and how to withdraw cash from the credit card?
Withdrawal of cash from credit cards should be made in case of a cash crunch or financial emergency. The process of withdrawing money is the same as your debit card cash withdrawal. There is no need to follow a lengthy process. Just go to your nearby ATM, insert your credit card, enter your PIN, choose the cash advance option, enter the amount you wish to withdraw, and press the enter button.
The interest rate applicable on credit card withdrawal
Credit card cash withdrawal charges are calculated on each transaction done by the credit card holder. Usually, banks charge between – 2.5 % to 4 % of the cash advance fee whenever you withdraw cash from your credit card.
This fee will reflect in the next month’s statement, and the interest rate will be based on the amount withdrawn.
Difference between the credit limit and credit card advance limit
|Credit Card Advance Limit
|The credit limit is the maximum amount you get on your credit card
|Banks inform cardholders in the beginning about the cash limit. Most banks provide a 20- 40 % cash limit of the offered credit limit
Cash limits are always different for different banks. Banks can change the cash limits per the cardholders’ repayment behaviour.
Benefits of credit card cash withdrawal
- Comes Handy in Emergency – Credit Card cash withdrawal facility may come in handy if you need urgent cash. You can adjust your cash limits and withdraw money from your credit card account from any nearby ATM.
- No documentation needed – You can withdraw cash using your credit card without any additional documentation; just use your card as a debit card to withdraw cash.
Drawbacks of credit card cash withdrawal
- Additional Charges – Each transaction comes with interest and an advance fee
- High Credit Card Bill – The additional fees make the credit card minimum due amount high.
Although withdrawing money from a credit card is very easy, one should use this facility when it’s necessary. Credit card cash withdrawal comes with a high-interest rate and charges additional fees that can be more expensive later. So avoid credit card cash withdrawal.