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Going to Withdraw Cash on Credit Cards? You Must be Aware of These 5 Facts

Since their inception, credit cards have been slowly but surely embraced by Indian consumers. Although most Indians love them, many don’t quite understand the implications and rules that accompany their use. It is imperative to be armed with knowledge about charges and fees when you use credit cards for uses other than purchases, such as for credit card cash withdrawal. Most Indians who use credit cards daily claim they get surprised at “hidden costs” at the time of viewing bills. While they state that banks claim cards are “free”, there are a few charges that card users must know of, even before they opt for any card.

With the Reserve bank of India’s new rules to ensure more security around credit card transactions, which came into effect from 1st October 2020, there may be some relief from additional charges. Cardholders may customize their credit card according to the features they want, keeping only those they use most. This eliminates the risk of fraud, as well as undue debt from using a service randomly and being charged for its use. 

ATM Transactions

Much like debit cards, credit cards can be used as cash withdrawal cards. As many people carry these around as they serve multiple uses, people tend to use them for cash withdrawals too. Due to the lockdown enforced by the Coronavirus pandemic, withdrawals from ATMs by debit and credit cards dropped drastically, as people’s want for cash decreased. At this time, it was used only for essentials. The contraction of a huge 49% saw a lull in ATM transactions, but also a slump in charges by banks and credit card companies levying charges on these. Credit card use comes with a lot of responsibility, not least of which is the timely payment of bills. Besides this, other charges are levied when you are issued a credit card. Banks may assure you that you get it for free, but nothing comes for free. Annual fees may be waived for the first year only and that’s what “free” translates to. A credit card without an annual fee is difficult to find, and after the first year of use, a maintenance charge will be levied. 

Using Credit Cards for Cash Withdrawals

Though the Reserve Bank of India mandates only five free withdrawals per month from ATMs for the withdrawal from your own bank account, Indians usually go above this limit on a monthly basis. In the case of cash withdrawals via a credit card, cash withdrawal is done less. Still, most Indians do use credit cards as cash cards and are usually unaware that they pay more. 

Some Facts To Know About

Credit cards have all but revolutionized how people view loans in India. The credit card advance option, unlike other regular loans, doesn’t need any kind of approval or documentation from the bank. The cash advance feature of credit cards does come with certain liability. Cards need to be used very wisely, or they may wreak havoc with finances. Many users in India fall into debt traps unknowingly. Here are some noteworthy points to keep in mind.

  1. Many cardholders use their credit cards as cash cards at ATMs. This incurs a cost, which is in the form of a service charge.

  2. In case you use your credit card to withdraw cash at an ATM, starting from the date of withdrawal, interest will be levied till it is paid back in totality.

  3. In case you spend at an ATM abroad, which many Indians tend to do, banks levy extra charges, such as cross-currency charges. 

  4. A cash advance fee that is charged per ATM withdrawal is typically 2.5% to 3% of the withdrawal amount.

  5. If you withdraw cash from an ATM via your credit card, a cash advance fee interest rate may increase if you remove more than a minimum amount specified by the credit card issuer or bank. 

A Credit Card For You

When you use a super card such as the Bajaj Finserv RBL Bank SuperCard at an ATM for cash withdrawals, you get free withdrawals for up to 50 days. Additionally, this card provides you with payment in easy EMIs, as well as loans for 90 days on your prescribed cash limit, at interest rates as little as 1.16%. 

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