Apart from swiping your credit card at stores or making purchases online, you can also use your credit card for a cash advance. This means that you can withdraw funds from an ATM just like you would with a debit card. While this requires no additional documentation, withdrawing cash using a credit card isn’t the same as withdrawing money using a debit card. To understand what this means, take a look at all you need to know about credit card cash withdrawals.
The limit you can withdraw
Not all credit cards have similar services. So remember that not all issuers give you this option, and even those who do, have varying cash advance limits. Therefore, you should always check with your financial institution to know if your credit card comes with the option of cash withdrawal. Once your issuer confirms that it does, enquire about the limit you can use. Usually, financial institutions allow you to withdraw 20% to 40% of your credit limit from an ATM.
Additional read: Credit card cash withdrawal charges and interest rate
The charges that accompany the withdrawal
While your debit card may levy a charge only when you withdraw more than 5 times in a month from another bank’s ATM, credit card cash withdrawal is much more expensive. This is because you have to pay a cash advance fee each time you withdraw money, up to 3% of the amount withdrawn. Additionally, you have to pay a finance charge on the cash advance fee until you repay the entire amount.
Most importantly, you have to pay interest on credit card cash withdrawals. This is applicable until you repay the amount in full. Moreover, interest is charged per the monthly percentage rate and can go up to 3.5%. Thus, consider how soon you can repay the amount before withdrawing money from credit cards.
The effect on your credit score
While withdrawing cash using your credit card will not directly affect your credit score, it can have an indirect effect. If you fail to repay the amount and the associated charges, your credit score will certainly bear the brunt.
One way to avoid these inconveniences and still be able to withdraw cash from credit cards is to opt for a card that makes this feature affordable. For instance, the Bajaj Finserv RBL Bank SuperCard offers a cash withdrawal facility that remains interest-free for up to 50 days. This means that you can take up to 50 days to repay the withdrawn amount without paying any interest. Further, you can also borrow an emergency loan once a year for up to 90 days at a nominal interest rate. In addition, the Bajaj Finserv RBL Bank SuperCard gives you offers and discounts on everything from apparel to hotel bookings. To access these features and annual savings of up Rs. 50,000 as possible, check your offer and apply.
Additional read: How to choose right credit card for yourself?
While care is taken to update the information, products, and services included in or available on our website and related platforms/websites, there may be inadvertent inaccuracies or typographical errors or delays in updating the information. The material contained in this site, and on associated web pages, is for reference and general information purpose and the details mentioned in the respective product/service document shall prevail in case of any inconsistency. Subscribers and users should seek professional advice before acting on the basis of the information contained herein. Please take an informed decision with respect to any product or service after going through the relevant product/service document and applicable terms and conditions. In case any inconsistencies observed, please click on reach us.
*Terms and conditions apply