The use of a credit card has evolved since the past decade. Now, more and more people use this mode of plastic money for various reasons. The reasons being; Extra cash for unforeseen costs and emergencies, To better their credit score, To fulfill shortage of cash until the next salary arrives and finally for withdrawals. While every reason is valid for using your credit card, you must consider not withdrawing cash as much as possible.
There are many reasons why you would withdraw cash using your credit card;
- Cases where cash payment is the only mode of payment that is accepted
- Cases of urgency in payment when you don’t have balance cash in any of your accounts.
- Finally in cases of emergencies where either you need the cash or else need to loan it to family or friends.
These reasons might force you to use your credit card to withdraw cash. Yes, it does help you to solve the current problem at hand. But, these are the things that you would need to keep in mind after withdrawing cash;
- Interest to be paid on withdrawal:
Once you withdraw cash using your credit card, you are liable to pay the amount along with interest during the bill payment. This interest begins right from the day you withdraw cash. The percentage usually is between 3 to 3.5%*.
Hence in case you have an urgent requirement and you withdrew cash from the credit card, don’t wait to repay the amount till the due date. Do the part payment whenever you can as you need to remember that you are charged interest per day.
- Upfront charges on withdrawal:
When you withdraw cash with your credit card, you are liable to pay an upfront charge. This charge varies from bank to bank and is usually around 1.5-3.5% at least. Means if you withdrew 10,000 rupees, you would be liable to pay an upfront charge of 150 minimum excluding service taxes.
- No discounts/reward points on withdrawal:
While you do get rewards and discounts while swiping your credit card, there is no such facility available when you withdraw cash using your credit card. But there are cash advance charges which you are liable to pay on each withdrawal.
- Cap on limit of withdrawal:
Your cash limit and credit limit are not the same. Every bank has a different limit when it comes to cash withdrawals using your credit card. It is usually low. Hence please do find out for your information regarding the cap on withdrawal.
Overusing your credit card to swipe and also using your credit card to withdraw cash is not good as it is borrowed debt. This debt has to be repaid often with interest and hence it’s best to use the withdrawal option as the last resort for you. To know more about how to apply for a credit card and better your credit score