Credit Cards come with great extensive features with different deals and discounts to provide comfort and luxurious living. There are not just one but many features which credit card issuers provide for the comfort of users. These features include international transaction benefits, rewards points and redemption, cash advance, lounge access, concierge benefits, and the list goes on. Depending on the type of credit card you are holding, you get the features accordingly. But there is one particular feature that we all are always excited about and that is cash advance.
Since the cash advance feature is to an ATM withdrawal from any debit card with just a minor difference. That minor difference is that the money you withdraw with your debit card is what you own but the money you are withdrawing from the credit card is owned by the bank until you pay it back in full. Now this feature does not come alone, it comes with cash advance fees, interest rates, and different types of fees. So it is always advised to keep a safe distance between you and the cash advance feature where cash is not much of a priority.
Basic Do’s And Don’ts Of Cash Withdrawal Feature
- Do not use cash withdrawal until and unless it is a very urgent situation.
- Do withdraw the cash from the bank’s ATM, to save the transaction fee banks charges from other Cards for the services.
- Do check your cash advance limit before the withdrawal
- Do check the necessary details and interest rates affiliated with the feature.
- Don’t make cash advance your habit
- Don’t postpone the repayments for cash advances as interest rates will keep getting added.
- Don’t take cash advances if you already have an outstanding amount pending.
How much will it cost you to use the cash advance feature on your credit card?
It can be quite difficult to find out exactly how much will be charged for cash withdrawal as every bank has different interest rates designated for different credit cards. Although the cash advance fee can be similar to most of the credit cards issued by a particular bank the fee will still be differentiated between the banks. There are credit cards as well with which you do not get charged any cash advance fee but those are mostly of the premium category. There are majorly two of charges added to the actual amount withdrawn which are –
- Daily Interest Rate – You will be liable for daily interest charges as per the bank. The charges are levied from the day you have withdrawn the cash, which means there is no grace period or interest-free period. The interest rate on cash withdrawals is usually higher than that on normal purchases. Hence, it is very important to be aware of the cost.
- Cash Advance Fee – This fee is charged by the bank itself which is usually a percentage of the withdrawn amount or a fixed amount. The type of fee levied depends on the amount you are withdrawing. This fee is charged as the fee for the usage of the feature and you will be charged the cash advance fee every time you swipe your credit cards in an ATM.
The charges involved are different from the charges which are generally applied on the regular purchase. This feature of cash advance does not have any grace period or interest-free period, to begin with.
How often should you withdraw cash with a Credit Card?
It is highly unlikely that you are ever suggested of cash advance in regular scenarios. This typically means that you are not advised to use the cash advance feature of your credit card until and unless it is urgent. In any way, by using the cash advance feature, you will need to pay for all these fees. This is the reason why the cash advance feature is extremely expensive. But it is not the only reason why cash advance is denied until the very last point, the other reason here is that it leaves a mark on your credit report. As your credit report has everything mentioned, it also has a mention of your cash advance and the interest rates applied to it. This also means that the lender will look at your credit report and might not like your usage of cash advance as it will seem like you do not have cash in your account. This might make a bad impression on your creditworthiness.
Cash withdrawal is one of the many features presented by the bank. One of that features is cash advance which not only allows you to use cash on your own accord but also some extra cash in hand in case of emergencies. The cash advance feature is of great use but there are some restrictions to be placed on the usage of this feature. This is because the feature is pretty expensive. Cash advance means paying back the withdrawn amount with the cash advance fee and the daily interest rates which are charged on the actual amount.
In basic words, there are many fees affiliated with the cash advance feature. This is a feature not to be used repetitively as it is not just costly but also might affect your credit report. Having been highlighted in the credit report might make your creditworthiness questionable. Hence, it is advised to use this feature responsibly and have all the detailed information you might need to be able to use the credit card efficiently.