- Typically, credit cards offer a separate limit for spending and cash withdrawals through ATMs.
- Banks charge a one-time cash withdrawal fee of almost 3% for cash withdrawals made using credit cards at ATMs
- These cash withdrawal fees are subject to a minimum amount regardless of how much you actually withdraw
New Delhi: With the holiday season in place, banks are texting their credit card customers to notify them of discounts and cashback offers available on purchases made at various merchant stores. One of these communications concerns the waiver of cash withdrawal fees / cash withdrawal fees from ATMs using a credit card. If you have received such a message or email, you should be careful before acting on the message. Read this story to find out why you shouldn’t withdraw money from ATMs despite the fact that banks offer to waive 100% of the cash withdrawal fee charged on these transactions.
Typically, credit cards offer a separate limit for spending and withdrawing cash through ATMs. To pay off the amount you spend in merchant stores using your credit card, banks typically allow up to 51 days of interest-free period. If you do not repay the amount by the due date, the credit card company charges up to 42% annual interest on the unpaid amount for the entire credit period.
But for cash withdrawals made using credit cards at ATMs, banks charge a one-time cash withdrawal fee of almost 3% and also interest of up to 42% per year for the entire period. credit period from the date of the cash withdrawal until you repay the money. advanced. Unlike spending in merchant stores, banks do not offer any interest-free credit period for credit card cash withdrawals.
For example, if you make a cash withdrawal of Rs 10,000 using your credit card, you will be charged Rs 300 as a cash withdrawal fee and up to Rs 500 as an interest fee for the first billing cycle which goes up to 51 days.
It should be mentioned here that these cash withdrawal fees are subject to a minimum amount regardless of how much you actually withdraw. For example, if your bank’s minimum cash withdrawal fee is Rs 500 or 3% of the maximum amount, then you will be charged Rs 500 as a cash withdrawal fee even if you withdraw Rs 10,000.
Since banks offer to waive cash withdrawal fees, you will not be charged the Rs 500 (for cash withdrawals up to Rs 14,000) mentioned above if you withdraw money, but interest charges will apply on the above cash withdrawal, but interest charges will be applicable. These cash withdrawal fees also attract 18% GST, so cash withdrawals up to Rs 14,000 will incur a fee of almost Rs 500.
This is the reason why you should avoid withdrawing money with a credit card from ATMs. You can go for other alternatives like credit card loan, which is cheaper than cash withdrawal. For larger amounts, you can opt for a personal loan.
It can be noted that withdrawing cash using a credit card also has a negative impact on your credit score as lenders assume that the cardholder is going through a bad financial situation and therefore may do so. default on loan repayment. So if you need cash, explore other options before going to an ATM to withdraw money using a credit card.