Is It Safe to Swipe Your Credit Card and Get Money?

1. Swipe your credit card at any ATM of the respective bank.
2. Select ‘Cash Advance’ option
3. Enter the card PIN

You can also visit the bank branch and request a cash advance by providing the card and relevant identification documents. The cash advance will incur interest rate immediately unlike regular purchases and each day will be counted until repayment.

Interest Rates and Fees on Credit Card Cash Withdrawal

You can swipe your credit card to withdraw cash, but the facility incurs certain rate of interest along with some applicable charges varying depending upon the card provider or the bank:

1. The cash advance limit is typically 20% to 40% of the overall credit limit. For example, with a Rs.1 lakh credit limit, you can withdraw Rs.20,000 to Rs.40,000 in cash.
2. Cash advance limits vary by card and can change based on factors like spending habits, repayment history, and credit score.
3. A fee is charged each time you withdraw cash, ranging from 2.50% to 3.00% of the withdrawal amount, with a minimum charge between Rs.250 to Rs.500 (approximately).

Note:

1. It is essential to review your bank's terms and conditions for cash withdrawal charges to avoid unexpected costs.
2. Interest rates on cash withdrawals differ between banks, typically calculated monthly from the date of withdrawal until full repayment.
3. Factors such as card usage, spending frequency, and repayment behavior can affect interest rates, which are subject to change.
4. For example, ICICI Bank charges a monthly interest rate of 3.40%, which equates to 40.8% annually on cash withdrawals.

Points To Remember to Manage and Minimise the Cash Withdrawal Charges

Here are the important points that should be remembered to minimise the cash withdrawal charges:

1. To protect your financial health, use the facility of cash withdrawal using a credit card only during the time of emergency as it may be too expensive for regular use.
2. Know about the cash advance limit, which is less than credit limit, before swiping your card to avoid incontinences at ATMs.
3. To reduce the overall cash advance cost, set up automatic payment to ensure timely repayment.
4. Look for alternatives before opting for the facility of cash withdrawal using a credit card.
5. Know about fees and interest rates associated with the cash advance before opting for this facility.
6. Withdrawal of cash frequently impacts the credit utilisation ration thereby affecting your credit score and hence this facility should not be availed frequently.
7. Look for a balance transfer facility in case you are struggling to repay your cash advance amount.

Things to Be Aware of Before You Swipe Your Credit Card

Here are the vital points that you should be aware of before swiping your credit card:

Budget Planning

1. Credit cards offer interest-free credit for a short period, leading to unplanned spending.
2. Increases financial burden due to overspending without a repayment plan.
3. To avoid debt accumulation, you must budget your expenses accordingly.

Offers and Promotions

1. Credit card providers offer cashback, discounts, and reward points on various purchases.
2. These promotions may include discounts on dining, movies, or shopping.
3. Always review the terms and conditions carefully before availing the facility of cash withdrawal.

Cash Withdrawal Charges

1. Most credit cards allow cash withdrawals but come with hidden charges.
2. It is important to understand the associated fees before swiping the card to obtain cash.

Credit Card Bill Payment and Credit Score

1. A credit score reflects your debt management and repayment habits.
2. Missing credit card bill payments negatively impacts your CIBIL score.
3. Cash withdrawal also impacts the credit score.
4. A low credit score can lead to loan rejections or higher interest rates.
5. Maintaining a good credit score helps secure better loan terms in India.

Pros and Cons of Swiping Credit Card to Obtain Money

You can swipe your credit card to withdraw cash in case of emergency, but the facility has various pros and cons that are mentioned below:

Pros of Cash Withdrawal Using Credit Card:

1. Provides quick access to cash in time of emergencies.
2. No requirement for a balance in your Savings Account.
3. No need for bank approval or extensive documentation.
4. Cash withdrawal limit is based on your Credit limit, offering immediate access to funds.

Cons of Cash Withdrawal Using Credit Card:

1. Fees are charged for each cash withdrawal.
2. No interest-free period like regular credit card transactions.
3. Interest starts accruing immediately from the date of withdrawal.
4. Cash withdrawals do not earn reward points like regular credit card purchases.