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Things to Know Before Swiping Your Credit Card for Cash at an ATM
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When you use your credit card to withdraw cash from an ATM, it is known as credit card cash withdrawal or cash advance. Generally, credit cards are used for card transactions. The credit card cash withdrawal facility is an additional feature offered by the issuing bank. Your bank may permit you to withdraw cash within a set limit. You will have to repay the same along with interest and other charges.
What is a Credit Card Cash Withdrawal Fee?
The credit card withdrawal fee or cash advance fee is a nominal amount you will have to incur every time you withdraw cash using your credit card. Generally, it is a percentage of the withdrawn amount.
Using your credit card to withdraw cash also attracts interest charges. You will have to incur finance charges from the date you withdraw cash from an ATM till the amount is repaid in full. It is worth noting that even if you make multiple credit card cash withdrawals on a given day, you will have to incur charges for each transaction based on the amount withdrawn.
How Does Cash Withdrawal Credit Card Work?
If you are wondering, can we use credit card at an ATM? Then the answer is yes! Cash withdrawal with credit cards are beneficial during a financial emergency and the process is easy and instant. Swiping a credit card for cash works the same as with a debit card. You just need to swipe it in an ATM and withdraw cash as per requirement, but it comes with an additional charge as well as a viable interest rate. Also, the number of withdrawals along with the minimum and maximum limits per day needs to be kept in mind.
How to Withdraw Cash Using a Credit Card?
The process of withdrawing cash from an ATM using your credit card is as simple as using your debit card. You will need to find an ATM, insert your credit card, and follow the instructions for cash withdrawal. You can withdraw funds from any nearby ATM, but you will need to be wary of the cash advance fee you will have to pay for making a withdrawal. You will also have to keep an eye on the minimum and maximum cash you can withdraw per ATM transaction or per day.
Therefore, you will need to know the terms and conditions applicable to your credit card before buying one. For instance, you will need to know fees and interest charges associated with your credit card cash withdrawal facility. Also, you must know the available cash limit on your credit card before opting for a cash advance. If you withdraw more than the limit assigned to you, you will be charged an additional over-limit fee along with other charges.
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Advantages of Credit Card Cash Withdrawal
The benefit of credit card cash withdrawal is that it provides instant access to liquid cash. Most ATMs are available 24x7. It means that you can have access to liquid cash at any time.
Disadvantages of Credit Card Cash Withdrawal
Mistakes People Usually Make On Using The Credit Card at ATM
While cash withdrawal from credit card at an ATM, people usually make a lot of mistakes which can be avoided to make the experience hassle-free. Some of these are:
Making cash withdrawals frequently must be avoided as this can burden you with extra interest charges and added fees.
Making late payments must be avoided because this can burden you with added late payment charges and can diminish your credit score.
Maxing out on your credit card limits must be highly discouraged as it comes along with over-limit fees.
How do Cash Advances Affect Your Credit Score?
When you opt for a cash advance, banks may not report it separately. The entire outstanding due and the non-payment of the same will be reported to the credit rating agency as a whole. So, withdrawing cash from an ATM using your credit card may not have a great impact on your credit score. But, because of high interest rates and additional fees levied on cash advances, you may not be able to make timely monthly payments.
When you fail to pay even the minimum amount due, it will reflect on your credit report. Hence, hurting your credit score. So, if you make timely repayments, there will not be any effect on your credit score due to credit card cash withdrawal.
Also Read: Credit Card Cash Withdrawal & Charges
In short
A credit card cash advance is a great way to access instant funds during emergencies. However, you will have to incur a cash withdrawal fee and interest charges for using your credit card to withdraw cash. If you wish to avail yourself of a waiver of ATM withdrawal charges, make sure to pay your dues on time and have a neat repayment record.
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