Credit cards are among the most preferred financial tools today. They come with numerous benefits like shopping discounts, movie ticket offers, travel privilege lot more. In addition to lifestyle and shopping benefits, credit cards can also be used to withdraw cash whenever needed. Just like a debit card, you can use a credit card across the ATMs and CDMs to withdraw cash.
Banks and financial institutions may levy some charges on credit card cash withdrawals, so you need to be aware of those fees. The article below throws light on various aspects of withdrawing cash through a credit card.
What is credit card cash withdrawal?
At present, banks and financial organisations offer instant credit cards with a quick and convenient application process. Moreover, modern credit cards are ladened with a host of privileges and benefits for each card expense. You can use your credit card to withdraw cash from ATMs and deposit machines in case you need them while on the go. Withdrawals through credit cards are commonly known as cash advances.
However, cash withdrawals accompany some charges such as cash advance fees and finance charges and, the charges vary across banks. If you are looking for a credit card with nominal cash advance charges, you can consider IDFC FIRST Bank credit cards as they offer one of the lowest fees on cash withdrawals and up to 48 days of interest-free period on domestic and international withdrawals.
Withdrawing money using credit cards is not always a viable option since they may incur hefty charges. Hence, you must consider withdrawing cash through credit cards only during emergencies.
Charges on credit card cash withdrawals
Although you get the facility of instant credit card cash withdrawals, you must consider the charges levied on them. The fees vary from bank to bank and you may need to pay a fee of up to 4.5% on withdrawal amounts. There may be a minimum charge that you need to pay on each withdrawal even if the amount is too low. Cash advance charges can range between ₹199 and ₹500 per transaction.
Additionally, cash withdrawals through credit cards also have a finance charge that is levied on the withdrawn amount from the date of withdrawal till the payment date.
Advantages of credit card cash withdrawals
Here are a few advantages of credit card cash withdrawals.
- Cash withdrawals through credit cards are a reliable and instant source of liquid funds and are useful during emergencies.
- Unlike personal loans, you don’t need to furnish any documents to acquire urgent cash.
- If you make consistent credit card payments without defaults, you can enhance your credit score.
Disadvantages of credit card cash withdrawals
Despite being a useful feature during urgencies, credit card cash withdrawals have a few downsides as mentioned below:
- The charges on credit card cash withdrawals are quite hefty compared to other forms of quick loans.
- Each time you withdraw cash using your credit card, you need to pay a cash advance charge.
- Interests on cash advances are charged from the date of cash withdrawal until the date of payment which can turn costly if you delay payments, except for IDFC FIRST Bank credit cards that offer up to 48 days of interest-free period on cash advances.
- You do not earn rewards and cashback on credit card cash withdrawals.
Withdrawing cash using a credit card can be a good option during emergencies it does not require lengthy documentation and approval processes. However, considering the charges and fees, credit card cash withdrawals should be your last resort.