If you have run short of money and need cash urgently for let’s say some unforeseen emergency, then a credit card could be a lifesaver. But most people don’t use the cash withdrawal facility that comes with a credit card. Usually, they don’t use this facility due to the high charges of cash withdrawal from credit cards.
Is there a way to withdraw money from credit without any charges? In this article, we will discuss the cash advance facility of credit cards and how you can avoid the applicable charges.
Charges associated with Credit Card Cash Withdrawals
First things first credit cards are not supposed to be used for cash withdrawals. They are to be used for online or offline purchases as a convenience to cardholders. However, emergency situations can come at any time. In such a situation cash withdrawal facility becomes a lifesaver.
But this facility is not free. When it comes to cash withdrawals using credit cards, two types of charges are levied by the bank, and they are as follows:
Cash Advance Fees
This fee is applied by the bank every time you use the credit card to withdraw cash. This fee is generally between 2.5% to 3.0% subject to a minimum applicable fee.
Charges of some popular credits are as follows:
|Credit Card||Cash Advance Fee|
|SBI Platinum Credit Card||3% of the withdrawn amount + ₹300|
|HDFC Bank Millennia Credit Card||2.5% of the withdrawn amount + ₹300|
|ICICI Bank Sapphiro Credit Card||3% of the withdrawn amount + ₹300|
|Axis Bank Signature Credit Card||2.5% of the withdrawn amount + ₹300|
|Citibank Rewards Credit Card||3% of the withdrawn amount + ₹300|
If you withdraw Rs. 10,000 from a credit card, you will have to pay somewhere between Rs. 250-300 as a cash advance fee.
But here is a surprising point for you, some credit cards have 0 cash advance fee.
Like every other transaction done by credit card interest charge is applied to the cash withdrawal facility but the only difference is that there is no interest-free period provided by the bank in the case of a cash withdrawal facility. In this case, interest will be applied from the very next day of the transaction.
In any other online or offline transaction done using the credit card, you will get an interest-free period which is from the day of the transaction to the due date of the bill.
How to withdraw Cash Using Credit Cards Without Charges?
In most cases, the cash advance fee will be applied on credit card cash withdrawals. Nevertheless, you can use certain alternative approaches to withdraw cash with your credit card while minimizing or completely eliminating the associated charges. Below, we will discuss some of the most effective methods to achieve this:
Get a Credit Card with No Cash Advance Fees
At present only two credit cards offer zero cash advance fees:
These credit cards are premium credit have high annual charges and give great benefits to the cardholder. However, not everyone can get these credit cards as they have very strict eligibility criteria.
If you have any of these cards you can withdraw cash from credit cards without any cash withdrawal fee.
Settle your credit card bills ASAP
If you don’t have a premium credit card without a cash advance fee, the best way to avoid high-interest charges is to pay off the cash advance as soon as possible. You can ask friends or family for help, or take out a personal loan at a lower interest rate than your credit card.
Some other indirect methods
If you need cash in an emergency and don’t want to withdraw it from an ATM using a credit card, you can ask your friends or family if they need to purchase anything or pay any bills. If they do, you can offer to pay for them on your credit card and then have them give you the cash.
This is a good way to avoid the high fees and interest charges associated with cash advances. However, it is important to make sure that your friends or family members are trustworthy and that they will repay you promptly.
Here are some additional tips for avoiding cash advances from credit cards:
- Keep your cash withdrawal amount low. The lower your balance, the less interest you will pay on any cash advances you make.
- Use a credit card with a low cash advance fee. Some credit cards charge a higher cash advance fee than others. If you know you may need to make a cash advance in the future, it is worth getting a credit card with a low fee.
- Consider a balance transfer. If you have a high-interest cash advance balance, you may be able to transfer it to a credit card with a lower interest rate. This can save you money on interest charges.
Cash advances from credit cards are expensive and should be avoided whenever possible.
While it is generally possible to withdraw cash using a credit card, there are always fees and interest charges associated with this type of transaction. The interest rate on cash advances is typically higher than the interest rate on regular credit card purchases, and there is no grace period, meaning that interest starts accruing immediately.
There are a few ways to reduce the cost of a cash advance, such as choosing a credit card with a low cash advance fee or using a balance transfer to move the cash advance to a card with a lower interest rate. However, even with these strategies, cash advances are still a costly way to borrow money.
If you find yourself in a situation where you need to withdraw cash using a credit card, be sure to repay the balance as quickly as possible to minimize the interest charges.
How can I transfer money from my credit card to my bank account?
You can use an online banking app or a wallet app to directly transfer the funds from your credit card to your bank account.
How can I minimize interest charges on cash advances?
The best way to minimize interest charges on cash advances is to repay the balance as quickly as possible. You can also consider transferring the balance to a credit card with a lower interest rate.
Is it ever a good idea to withdraw cash from a credit card?
Generally speaking, it is not a good idea to withdraw cash from a credit card. Cash advances are expensive, and the interest rates on cash advances are typically higher than the interest rates on regular credit card purchases. However, there may be some situations where withdrawing cash from a credit card is necessary, such as if you have an unexpected emergency.