You usually have to pay a 2.5-3% charge to withdraw cash from a credit card.
Thereafter 3% interest is charged for non-payment of the amount in one month.
Taking out frequent cash advances can negatively impact your credit score.
New Delhi. Money is needed during festivals. Employers have limited income and expenses are thousands. A credit card helps them a lot in such a situation. Credit card companies also offer various offers during the festive season. This includes cashback, rewards, points etc. Many people withdraw cash from credit cards as well. This is called a cash advance.
Many times people withdraw cash from credit card due to lack of money in debit card, then sometimes this transaction is done by mistake. A cash advance can come in handy in case of an emergency, but you will also have to pay a charge on it. If you also want to withdraw cash from a credit card, then first you should know the important aspects related to it.
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What is its benefit?
The only benefit of getting cash from a credit card is usually that you can use it in an emergency. If you don’t have money in your bank account, a credit card can help. After completing your task, you become debt free by paying off the loan amount. You don’t need to ask a friend or relative for money in times of need.
What is the damage?
The first charge you have to pay for a cash withdrawal from credit is usually 2.5 to 3 percent of the amount withdrawn. If you take a cash advance of Rs 1 lakh, you may have to pay a charge of Rs 2-3 thousand. Also, you have to pay interest on it every month which is around 3.5%. Also, taking out frequent cash advances negatively affects your credit score.
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How much money can you withdraw?
It usually depends on the card limit and the cardholder’s credit profile as to how much you can withdraw. Generally you are allowed to withdraw 20-40% of the card limit in cash. The balance can only be used for card transactions.
How accurate is it to withdraw cash from a credit card?
As you may know by now, the pros and cons of getting cash from a credit card are few and far between. It can cost you dearly. So avoid cash withdrawals from credit cards whenever possible. Use cash advance only in case of emergency and pay it back as soon as possible.
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Tags: Bank, Business News in Hindi., credit card, Debit card
First Publication: 04 October 2022, 14:44 IST