Rules for withdrawing money through credit card ATMs have been published. Do not withdraw money from credit card from ATM. It is said to cause great loss.
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What happens if you withdraw money from an ATM with a credit card
When they run out of cash at the end of the month, or have a sudden need for cash, people often turn to their credit cards when they have no other option. Banks don't just give you credit on cards, now just like debit cards, credit cards also have a cash advance facility.
Credit Card, You can withdraw money from a credit card by going to an ATM just like you can withdraw money from a debit card, but if you're worried about your credit score, read on first. Your credit score depends on many factors. In simple words, withdrawing money from an ATM with a credit card will not cause your credit score to drop.
But it can definitely cause the score to drop. I mean, it doesn't have a direct impact, but some things happen, causing your score to drop. For example, it increases your delinquency and credit utilization ratio, which lowers your credit score.
Here is a summary of the new rules
Cash advance fee, Banks will now charge a cash advance fee of 2.5% to 3% of the withdrawn amount, subject to a minimum amount of ₹250 to ₹500.
Interest, Interest on cash advances will be charged from the day of the transaction until the repayment is made in full. The interest rate will be the same as the purchase interest rate on your credit card.
ATM withdrawal limit, Banks may impose a limit on the amount of cash you can withdraw from an ATM using your credit card. This limit may vary depending on the bank and the type of credit card you have.
Penalties for violating the rules,
Over-the-limit fee, If you exceed your cash advance limit, your bank may charge you an over-the-limit fee. This fee can range from ₹250 to ₹500.
Late payment fee, If you fail to make a full payment on your cash advance on time, your bank may charge you a late payment fee. This fee can range from ₹250 to ₹500.
Here are some tips for avoiding penalties,
- Know your cash advance limit and don't exceed it.
- Repay your cash advance in full as soon as possible to avoid interest charges.
- Set up automatic payments to ensure that your cash advance payment is made on time each month.
It is important to note that the new rules for withdrawing money from ATMs using credit cards may vary slightly from bank to bank. It is always best to check with your bank for specific information about their policies and fees.
In conclusion, understand this, withdrawing money from a credit card does not affect your score, but if you do not pay back the interest immediately, your debt increases and at a faster rate. The loan is accrued from the date you receive the loan and finance charges apply until you repay it.