Credit Card – Sin 3 – Cash withdrawal

Many a times we see advertising from Banks regarding how Credit Cards can be helpful in withdrawing the cash in case of emergency. But there are some basic charges which are different for cash withdrawal from a Credit Card and a Debit Card.

FIRST:

The bank will levy cash withdrawal fee which can be as high as 5% of the amount you withdraw. That does not mean that if you withdraw only 100 Rs you pay 5 Rs as charge. This is so because all the banks a minimum cash withdrawal fee which can be as high as 250 Rs. It simply means that even if you have taken out only 100 Rs even then you will be paying up a charge of 250 Rs.

SECOND:

Just like late payment, bank will charge interest which can be as high 3.75% per month…and if you make any additional transaction from the date of your statement generation, even those transactions will also be charged at the same interest rate (varies from bank to bank though).

THIRD:

Not to forget, the cash withdrawal fee and interest amount also invites Service Charge and Education Cess. So let’s say, your late payment penalty is 250 Rs then it actually becomes 300 + Service Tax (10%) + Education Cess (3% on Service Charge) making it almost 276 Rs. Similar charges apply for interest amount.

FOURTH:

Few banks also apply a transaction fee for every subsequent transaction that you do after you withdraw cash.

So never never withdraw cash with Credit Card unless it is really an emergency and you do not have any other alternative as using debit card or borrowing from someone.