Unrestricted usage of credit cards and erratic repayment habits can easily push individuals into debt traps. It is, thus, extremely crucial to be cautious while using these cards and more importantly, while planning repayment of the credits utilized. With correct usage, this payment card can prove to be a reliable financial tool during emergencies, as well as to meet daily expenses. While it combines several features, cash withdrawal from ATMs is one of the more popular benefits offered under it.
However, most financial experts recommend cardholders to refrain from availing of this facility primarily due to hefty credit card cash withdrawal charges. Individuals must understand the applicable charges on cash withdrawal to ensure that they do not end up incurring unwarranted debt.
What are cash withdrawal charges on a credit card?
A credit card is known for its several consumer-friendly features and attractive reward points. Contrarily, while cash withdrawal via credit card seems an alluring facility, it attracts several additional charges that can easily exhaust an individual’s pocket.
Following are the break-ups of the charges that an individual is required to pay upon opting for this facility.
Cash advance fees
One of the major credit card cash withdrawal charges includes cash advance fees. This particular charge ranges from 2.5% to 3% of the withdrawn amount that accounts up to Rs.300 – Rs.500. It, however, varies with different issuers.
Depending on the card type and issuing agency, individuals need to pay a specific interest on all cash advances made via a credit card. This interest rate can range between 2.5% and 3.5% per month until the total amount is repaid.
Therefore, individuals who wish to reduce credit card interest and save money should avoid opting for this facility.
Credit card cash withdrawal charges also include compensation to lenders in the form of finance charges. This charge is levied on the amount withdrawn until it is repaid in full. The quantum of this charge is also similar to that of cash advance fees.
Late payment fees
On top of these charges, late fees will also be levied in case one fails to repay the amount withdrawn within the due date. Moreover, typically this facility does not come with any interest period.
Nonetheless, by selecting the right card like Bajaj Finserv RBL Bank SuperCard, individuals can save substantially on interest payment. The card facilitates ATM cash withdrawal with an interest-free period of up to 50 days and also extends several other lucrative benefits.
This NBFC also provides pre-approved offers that make the credit card application process straightforward and less time-consuming. Besides credit cards, such offers are also available on a gamut of financial products like personal loans, business loans, and several others. You can check your pre-approved offer by entering your name and mobile number.
Since cash withdrawal using a credit card can be quite expensive, individuals need to find ways to avoid paying these charges on top of repaying the amount utilized.
How to avoid paying withdrawal charges?
While a credit card is one of the most effective financial products to address any emergency, withdrawing a cash advance is a costly affair with all these additional charges.
Nonetheless, in case of financial emergencies or liquidity shortage, individuals alternately can opt for a personal loan on the unused credit limit of the card. Also known as a credit card loan, this option will allow individuals to pay easy EMIs against lower interest rates.
This, effectively, is a much cheaper mode of financing when compared to credit card cash withdrawal charges.
Moreover, by opting for a personal loan on a credit card, individuals can also improve their credit score by repaying the debt on time. Eventually, it helps in boosting future loan eligibility to a great extent.