Withdrawing cash on a Credit Card? Here are the dos and don'ts!

At the end of the month, a credit card cash advance can be a convenient option for extra cash. The advantage is that you get immediate funds without extensive documentation or waiting for bank approval. The amount you can withdraw depends on the card issuer's cash limit, which is a percentage of the card's total credit limit.

However, this feature comes with specific terms and conditions that one must know. Here's a list of factors to consider when withdrawing cash through Credit Cards.

Charges

While it's well-known that credit cards come with interest and fees, withdrawing cash on them can be particularly expensive. Here are the charges associated with these transactions:

• Cash advance fee: This is charged every time you withdraw cash using your Credit Card. Typically, it ranges from 2.5% to 3% of the transaction amount, subject to a minimum of ₹250 to ₹500 and is reflected in the billing statement.
   

• Finance charges: Regular Credit Card transactions attract finance charges, and so do cash withdrawals. The charge is levied from the date of the transaction up until the repayment has been done.
   

Interest

Interest is charged on a monthly percentage rate, typically from 2.5% to 3.5% per month. HDFC Bank Credit Cards offer one of the lowest monthly and annual interest rates, ranging from 1.99% to 3.5% and 23.88% to 42%, respectively. Unlike regular transactions, for cash withdrawals, there's no interest-free period; charges start accruing from the day of the transaction till it's paid in full.

ATM Fee

As a Credit Card user, you are allowed up to 5 free ATM transactions per month, depending on the location. Beyond this limit, you are charged what's known as an ATM maintenance or interchange fee. Until recently, the fee was ₹ 15 per cash withdrawal. However, starting on 1st August, the RBI has revised it to ₹17 per withdrawal. In the case of non-cash transactions, the fee has been raised from ₹5 to ₹6. Both amounts are exclusive of taxes. The fee will be charged to your Credit Card and appear on your Credit Card statement. 

Late Payment Fee

If you do not repay the full amount, late payment charges are levied on the outstanding balance, ranging from 15% to 30%.  HDFC Bank Credit Cards has a relatively low interest rate for overdue interest compared with its competitors.

Be aware of the charges levied by your bank and consider whether they are worth paying.

Credit Score

Taking a cash advance may not impact your credit score, but the high charges associated with cash withdrawals drive up monthly payments. Failure to pay the minimum due amount can affect your credit score adversely. Be sure to make your payments on time!

Reward Points

Most banks offer rewards to Credit Card holders. This can be in discounts, gifts, or other deals. Banks create specific programmes incentivising cardholders to use Credit Cards for dining, travelling, shopping, etc. Using your Credit Card in these situations, you can rack up Reward Points, which can be redeemed for gift vouchers, cash gifts, air miles, etc. However, when you use your Credit Card to withdraw cash, you may not receive any Reward Points, so it is best to opt for a cash advance when you desperately need money.

With HDFC Bank Credit Cards, you get the following advantages when using the cash advance feature:

Ease of use

A Credit Card cash advance can be availed at any time. Furthermore, unlike all other loans, there's no annoying paperwork.

Get rewards

Although applicable in a few cases, depending on your HDFC Bank Credit Cards, you may receive some rewards and offers in the form of CashBack, Reward Points, etc.

Let's assume you're faced with a short-term financial crisis and urgently need cash. If taking a loan or asking a friend for money is not viable, advance cash can help you tide over the situation. If your bank account does not have enough funds to take care of your needs, you can withdraw cash from your Credit Card, although at an additional cost. Most Credit Cards also come with a complimentary insurance cover that provides death or permanent disability benefits of up to ₹10 lakh, subject to certain terms and conditions.

Thanks to the numerous features you get with HDFC Bank Credit Cards, you can save money and avail of various benefits when you use your card.

To apply for HDFC Bank Credit Card, click here.

Read more on what you can use your Credit Card for.

*Terms and conditions apply. Credit Card approvals are at the sole discretion of HDFC Bank Limited. Credit Card approvals are subject to documentation and verification per the bank's requirement.