If you use a credit card, then you know that it is used in discipline then it is fine, otherwise you have to pay huge interest. Many times people start thinking of using it to withdraw cash. They also do. Before doing this you should understand about it well. A thick charge also has to be paid when the cash is extracted. Come, let’s discuss this here.
Fee or charge
Credit cards levy interest and fee, even more. But withdrawing cash from a credit card can prove to be more expensive than that. The fees on these loans are enough. There is a fee- Cash Advance Fee. This is the fee that is levied every time you use cash using your credit card. This transaction ranges from 2.5% to 3% of the amount, which ranges from the minimum ₹ 250 to ₹ 500 and is represented in the billing statement. The second is finance charge. Regular credit card transactions are charged finance charge and cash withdrawal is also charged. The fee is levied from the date of transaction to repayment.
Interest
Interest is charged at a monthly percentage rate, usually 2.5% to 3.5% per month. Unlike regular transactions, there is no interest-free period for cash withdrawal; The fee starts from the day of the transaction and starts until the complete payment is made. Therefore, it is important that you repay the cash advance amount as soon as possible.
ATM duty
As a credit card user, you are allowed 5 free ATM transactions per month based on location. After this you are known as ATM maintenance or interchange fee. Both zodiac signs do not include taxes. The fee will be charged from your credit card and will appear in your credit card statement.
Late payment fee
If you do not pay the entire amount, the delayed payment fee is levied on the outstanding amount and it can range from 15% to 30%. Be aware of the fees levied by your bank and consider if they are payable. Delayed payment fees can affect your credit score.
Cash withdrawal limit
Usually, you can withdraw a certain percentage of your credit limit as cash. In some banks, you can withdraw 40% of cash advance of credit limit.
Credit score
Taking cash advance can not affect your credit score, but high fees associated with cash withdrawal increase monthly payment. Not paying the minimum amount payable can adversely affect your credit score. Be sure to make your payment on time!
Reward point
Most banks give rewards to credit card holders. It can be in the form of discounts, gifts or other deals. Banks make specific programs that encourage card holders to use credit cards for food, travel, shopping etc. You can get reward points through other payments, which can be redeemed for gift vouchers, cash gifts, air miles etc.
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