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Use your Credit Card to withdraw cash!
Posted on Monday, April 15th, 2024 | By IndusInd Bank
Emergencies can arise anywhere, anytime; they don’t come with a warning. Hence, having a source for instant cash withdrawal can be a great relief. Many of you own a credit card. It can help with instant credit, but can you withdraw cash using your credit card? Yes, just like a debit card, your credit card can be used to withdraw money in need. However, this convenience comes at a cost. Let us understand the nitty-gritty of these withdrawals.
Cash Limit
The limit on your credit card is offered for spending. Hence, the entire credit limit amount will not be available to withdraw cash from a credit card. The cash limit is usually 20% to 40% of your credit limit, depending on the bank. Hence, aim for a higher credit limit to be able to withdraw more cash as an emergency fund.
Also Read: How to Improve Your Credit Card Limit?
Fees & Charges
The cash withdrawal option on even the best credit cards should be your last resort as there are many charges involved, which you must be aware of before you apply for credit card:
- Cash Advance Fees: Credit cards provide credit for spending. When cash is advanced, a fee must be paid, generally 2.5% to 3% of the transaction amount, with a minimum of ₹250 to ₹500. Induslnd Bank Samman Rupay Credit Card for Government officers offers Zero Cash Advance fee.
- Finance Charges: Like other transactions, cash withdrawals are also subject to finance charges on the outstanding amount from the day of the transaction until repayment.
- ATM Fee: Withdrawing cash from the ATM also attracts fees for more than five monthly transactions.
- Late Fees: If you cannot pay the amount withdrawn by the due date, you must bear the late fees, ranging from 15% to 30%. This is similar to purchases and other spending.
Interest
Regular credit card usage attracts interest from the due date until the outstanding is paid, so the holder gets a grace period. However, in case of withdrawal of cash from credit card, interest is charged from the time of withdrawal to clearance. So, from the day of the transaction until the day of payment, a monthly rate of 2.5% to 3.5% is charged on the transaction amount.
Credit Score
Withdrawing cash does not impact your credit score. However, the charges accompanying the withdrawal can add to the already existing cash crunch, driving you towards a debt trap. So be mindful of exercising this option and clearing dues as soon as possible.
Rewards
Credit card issuers entice holders with many benefits, such as cashback, rewards, air miles, waivers, etc. These could be for shopping, dining, travel, and so on. If used correctly, these rewards can be beneficial. IndusInd Bank understands that utilising all reward points before expiry gets stressful and hence offers lifetime rewards. However, no reward points are awarded when youwithdraw cash from the credit card. Hence, using the cash withdrawal option only when in absolute need is wise, even for the best credit cards.
Indusind offers a great option for comparing various credit cards and applying for a credit card.Read and explore Credit Card – Compare Credit Cards & Apply Instantly.
There are circumstances when the charges seem insignificant compared to the convenience offered. Cash withdrawal on a credit card, an option exercised only in absolute need, can be one such circumstance. It provides ease of access as the limit is approved, and no additional paperwork is required. It is instant and hassle-free. If you are mindful of the charges and have the means to repay timely, this option of cash from credit card can serve as a significant emergency fund.
Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.
