ATM Cash Withdrawal: The utilization of credit cards has significantly risen in contemporary society. They offer not only convenience for purchases but also serve as a valuable resource for cash withdrawals during emergencies.
Crucial to understand the essential terms and conditions
However, it is crucial to understand the essential terms and conditions associated with cash withdrawals from credit cards to avoid potential financial setbacks. When cash is withdrawn, banks typically impose a cash advance fee, which ranges from 2% to 3% of the amount withdrawn.
A 3% cash advance fee
This fee will appear on your credit card statement. For instance, if you withdraw Rs 10,000 and incur a 3% cash advance fee, an additional Rs 300 will be charged. Interest on cash withdrawals is applied immediately, unlike interest on purchases, which is charged after a certain period. The interest rate can vary between 24% and 48% per annum, commencing from the date of withdrawal.
A grace period of 20 to 50 days
Failure to make timely payments can exacerbate the interest burden. Generally, a grace period of 20 to 50 days is provided for credit card purchases, during which no interest is charged; however, this grace period does not extend to cash withdrawals. Each credit card is assigned a cash limit, typically ranging from 20% to 40% of the total credit limit.
What if the limit exceeded?
Exceeding this limit may lead to transaction failures. Additionally, late repayment of cash advances can negatively impact your credit score, potentially hindering future loan or credit card applications.