Everybody goes through a hard time when they run out of cash and during that time the credit card can become very handy. It lets us have easy money and instant loan without the need of submitting any documents and also it doesn’t require any approval. While withdrawing money in the initial stage when we go through a crisis we don’t think about anything but later we understand the hidden charges behind those transactions. Did you know that in some cases the interest charge can go beyond 36%?
Here is the detailed information about the charges levied on your card when you withdraw cash.
- Cash advance fees: This is the fee which is applied to a credit card when you use it to withdraw cash each time. It can range from 2.5% to 3% of the amount that you have withdrawn. The minimum that you will get charged ranges between Rs.300 to Rs.500. You will be charged this amount in your next billing statement.
- Financial charges: Along with the cash advance fees, you also need to pay the finance charges. This is equivalent to charges on spinning credit or that charged on pulled back sum. This will be applied on your card from the date you withdrew cash and until the date, you do the full payment.
- Interest charges: After this, you have interest charges. This may vary. This again gets charged from the date of transaction till the date you have made the full payment. If you withdraw cash from the credit card, then you get charged 2.5-3% interest rate that to monthly. The rate will vary depending on the type of credit card you own and the bank.
How to understand the net charges that have occurred on your credit card withdrawal?
Let’s say you have withdrawn Rs.10,000 from your credit card. Your cash advanced fee is let’s assume Rs. 500 and the interest that will occur is 3%, in that case, the total amount that you will have to pay is Rs.10,800. This can become 8% monthly or can go as high up to 96% annually. However, on the off chance that you spread your reimbursement, the aggregate cost charged on the advance will descend.
Do remember that you won’t get any interest-free period for your cash withdrawal on credit card and it will continue to be there until you clear your outstanding dues. Also, these things impact the credit score as well. Likewise, such advances affect the financial assessment of the borrower adversely, even in a situation when the minimum amount is not paid. So, make sure to make the payments on time to avoid such adverse impacts.