Credit cards are great at many things, one of which is being a pretty good alternative to loan applications. These applications need a multitude of paperwork and prolonged periods to get approved. You can say from experience that you might need money at a moment’s notice, and emergencies are not always courteous enough to alert you beforehand.
Therefore, you must know how to get cash from a credit card to get by in times of need. For this specific requirement, credit card cash withdrawal is the perfect facility. With this privilege, you can just walk into an ATM and withdraw as much cash as you need, depending on your cash limit. However, there are certain ramifications associated with this withdrawal that you should not neglect.
Pros of Credit Card Cash Advance
Let us first focus on the pros of credit card cash withdrawal.
- No Paperwork: There will be absolutely zero paperwork required for cash advances. You will just need to visit an ATM and withdraw cash. In this respect, a credit card works like a debit card. However, the magical quality of the card lies in the fact that it lets you access cash that you have not yet earned! It is just like borrowing from a friend on a rainy day.
- Access the Facility Anytime: ATMs are open 24×7, so you can avail of the cash advancement facility at any point in time. Just apply for a reliable credit card like the Bajaj Finserv RBL Bank SuperCard and say goodbye to panicking. You have all the right to borrow from your future income, and you won’t have to resort to borrowing from friends or relatives.
- Access to Flexible Limits: The best credit cards provide you with flexible limits on your borrowing. Some even let you borrow in excess of your credit limit. You just need to keep in mind that you have to repay the money on time so that your credit score is not affected.
- Convenient Fee Structure: Banks have a flexible borrowing process with regard to cash withdrawal. Policies vary from bank to bank. Some banks prefer to charge a one-time processing fee and lend you the money at zero interest for a couple of months. Others like to do away with the processing fee and charge a nominal interest instead. Read the offer documents carefully to understand the fee structure well.
Cons of Credit Card Cash Advance
Despite their numerous benefits, credit card cash withdrawals inherently come with these drawbacks.
- Daily Interests: The issuers who charge interests tend to do so on a daily basis. Therefore, go for a cash withdrawal when you are absolutely sure that you will be able to repay the money real quick. Otherwise, there is a risk of falling into a debt trap.
- Transaction Fee is Levied on Every Transaction: If it so happens that you could not judge the amount of money you need, it will mean a financial loss. If you under-borrow and then borrow for a second time, you will be charged a processing fee even if you do not exceed your credit limit. Therefore, carefully calculate the amount of money you require before borrowing.
- No Reward Points: Credit card companies do not view credit card cash withdrawals as proper expenditures, and do not consider them for reward benefits. Therefore, do not expect anything out of these transactions. The best you could do is repay on time to save both—your financial reputation and your credit score.
These are the advantages and disadvantages of cash withdrawal using a credit card. Now that you know how to get cash from a credit card, use the card only during emergencies. Making a habit out of this, or using it for casual reasons like lending a friend is not advisable. If you want to make a purchase, it is better to buy it on EMIs. Else, go for a personal loan if time permits.