Withdrawing cash on a Credit Card? Here are the dos and don'ts!

 Withdrawing cash on Credit Card: Dos and don’t

At the end of the month, a Credit Card cash advance may be your best bet for some extra cash. The best part: instant funds without the hassle of submitting documentation and waiting for approval from the bank. The amount you can withdraw depends on the cash limit assigned by the card issuer which is a percentage of the card’s total credit limit.

However, this feature comes with specific terms and conditions that one must be aware of. Here’s a list of factors to consider when withdrawing cash through Credit Cards.

• Charges
  While it is understood that Credit Cards come with interest and fees, withdrawing cash on Credit Cards can prove to be a costly deal. Here are charges these loans attract:

• Cash advance fee: This is the fee charged every time you withdraw cash using your Credit Card. Typically, it ranges from 2.5% to 3% of the transaction amount, subject to a minimum amount of Rs 250 to Rs 500 and is reflected in the billing statement.
• Finance charges: Regular Credit Card transactions attract finance charges and so do cash withdrawals. The charge is levied from the date of the transaction up until the repayment has been done.

• Interest
  Interest is charged on a monthly percentage rate, typically from 2.5% to 3.5% per month. HDFC Bank Credit Cards offer one of the lowest monthly and annual interest rates, ranging from 1.99% to 3.5% and 23.88% to 42% respectively. Unlike regular transaction, for cash withdrawals, there’s no interest-free period; charges start accruing from the day of the transaction till it’s paid in full.

• ATM fee
  
  As a Credit Card user, you are allowed up to 5 free ATM transactions per month, depending on the location. Beyond this limit, you are charged what’s known as an ATM maintenance or interchange fee. Until recently, the fee was Rs 15 per cash withdrawal. However, starting 1^st August, the RBI has revised it to Rs 17 per withdrawal. In case of non-cash transactions, the fee has been raised from Rs 5 to Rs 6. Both amounts are exclusive of taxes. The fee will be charged to your Credit Card and appear on your Credit Card statement.

• Late payment fee
  If you do not repay the full amount, late payment charges are levied on the outstanding balance and this could be anywhere from 15% to 30%. Compared with its competitors, HDFC Bank Credit Cards have a relatively low rate of interest for overdue interest.
  
  Be aware of the charges levied by your bank and consider whether they are worth paying.
  
  
• Credit score
  Taking a cash advance may not impact your credit score, but the high charges associated with cash withdrawals drive up monthly payments. Failure to pay the minimum due amount can affect your credit score adversely. Be sure to make your payments on time!
  
  
• Reward Points
  Most banks offer rewards to Credit Card holders. This can be in the form of discounts, gifts, or other deals. Banks create specific programmes that incentivise cardholders to use Credit Cards for dining, travelling, shopping, etc. By using your Credit Card in these situations, you can rack up Reward Points, which can be redeemed for gift vouchers, cash gifts, air miles, etc. However, when you use your Credit Card to withdraw cash, you may not receive any Reward Points, so it is best to opt for a cash advance when you desperately need money.
  
  With HDFC Bank Credit Cards, you get the following advantages when using the cash advance feature:

• Ease of use
  A Credit Card cash advance can be availed at any time of your choosing. Furthermore, unlike all other loans, there’s no annoying paperwork.
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• Get rewards
  Although applicable in a few cases, depending on the HDFC Bank Credit Cards you have, you may receive some rewards and offers in the form of CashBack, Reward Points, etc.
  
  Let’s assume you’re faced with a short-term financial crisis and are in urgent need of cash. If taking a loan or asking a friend for money is not a viable option, advance cash can help you tide over the situation. If your bank account does not have enough funds to take care of your needs, you can withdraw cash from your Credit Card, although at an additional cost. Most Credit Cards also come with a complimentary insurance cover that provides death or permanent disability benefit of up to Rs 10 lakh, subject to certain terms and conditions.
  
  Thanks to the numerous features you get with HDFC Bank Credit Cards, you can save money as well as avail of various benefits when you use your card.
  
  To apply for HDFC Bank Credit Card, click here.
  
  Read more on what you can use your Credit Card for.
  
  *Terms and conditions apply. Credit Card approvals at the sole discretion of HDFC Bank limited. Credit Card approvals is subject to documentation and verification as per Banks requirement.