Credit card: Credit cards can be incredibly useful in today’s world. When you’re short on cash, they can help you manage your expenses easily. One of the main benefits of credit cards is the payment grace period. If you pay off your balance during this time, you will not incur any interest charges. Additionally, many credit cards come with various offers and discounts, which contributes to their popularity.
Not only this, but credit cards also allow cash withdrawals through a feature known as cash advance. While this can be convenient, it can also be quite expensive. If you make a cash transaction with your credit card, intentionally or by mistake, you could face significant financial repercussions. Once the transaction is done, regretting it will not bring you any relief.
Cash Transactions with Credit Cards: How much cash transaction is done through it?
All credit card users have the option to withdraw cash, but the amount they can access depends on their card limit. Most banks allow cash withdrawals of 20 to 40 percent of your total credit limit. For example, if your credit limit is Rs 5 lakh, you can withdraw between Rs 1 lakh and Rs 2 lakh in cash.
Disadvantages of withdrawing cash from a Credit Card
1. High charges: While you can withdraw cash, it carries a fee ranging from 2.5 to 3 percent. If you withdraw Rs 1 lakh, you could end up paying between Rs 12,500 and Rs 3,000 in fees, which can be quite frustrating.
2. No Interest Free Period: Unlike regular purchases, cash advances do not benefit from an interest-free grace period. This means that you will begin accruing interest on the withdrawn amount immediately.
3. Impact on credit score: Frequent cash withdrawals can negatively affect your CIBIL score. Therefore, consider using this option only in extreme situations when no other alternatives are available.
Disclaimer:
The information contained in this post is for general information purposes only. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the post for any purpose.
We respect the intellectual property rights of content creators. If you are the owner of any material featured on our website and have concerns about its use, please contact us. We are committed to addressing any copyright issues promptly and will remove any material within 2 days of receiving a request from the rightful owner.