One of the biggest reasons for this today is the growing trend of cashless transactions and interest-free credit periods. Along with this, various discounts on credit cards including reward points, cashback and petrol surcharges make them more attractive.
Cash advance facility
Apart from these facilities, cash advance facility is also available on the credit card, through which the user can withdraw money from the card at the time of need. You should avail the cash advance facility only in times of emergency or need. You will have to pay high interest and transaction charges on this. Frequent use of cash can negatively affect your credit score.
Be careful when withdrawing cash
Credit card withdrawals can be overwhelming. You should use this facility in case of emergency, but when you have to do so, you should pay the advance as soon as possible. It will be beneficial to you if you can make the payment as early as possible before the billing date.
Cash withdrawal limit
Users get various limits for withdrawing money from credit cards from banks. This limit is decided based on the total credit limit of your card. Generally, 20 to 40 percent of the total credit card limit can be withdrawn in cash. If your credit card has a total credit limit of Rs 5 lakh, then you can withdraw Rs 1 lakh to Rs 2 lakh from your card.
Additional charges will apply
If you withdraw a cash advance from a credit card, you will have to pay an additional fee in addition to interest, which may be 2.5 to 3 percent of the cash withdrawn. In such a situation if you withdraw Rs 1 lakh from your credit card as cash, the bank may charge you Rs 2 to 3 thousand for this. The bank will also charge interest at the rate of 3.5 percent per month on the cash withdrawn from you.