A common myth behind credit cards is that they cannot be used to withdraw cash, unlike debit cards. This idea comes from the fact that these cards are not linked directly with the holder’s bank account. People tend to think credit cards are only for online transactions or for buying things without cash.
Although credit cards are capable of reducing the hassle of cash transactions, they can certainly do more than that. Many people do not know that a credit card can be used to withdraw cash if needed. Now, this can be a game-changer since a person would be able to borrow direct money from an entity within seconds technically.
A 2019 report by The Economic Times showed there was a growth of 27% in credit card usage in India that year. With the growing use of credit cards, a little more knowledge about their usage can benefit anyone. Here are seven key factors to keep in mind if you are planning to withdraw cash with a credit card:
#1 How to withdraw money with a credit card?
A credit card works like just a debit card, and you can use an ATM to withdraw money with a credit card. In India, a few banks offer this cash advance facility, so check this with your bank before trying. Kotak Mahindra Bank has the best credit cards in India regarding cash advances with minimum charges and hassle. Net banking can also be used to withdraw cash by using Kotak’s credit cards.
- Log in to the net banking
- Go to the “Credit Card” option
- Use the “Cash as Ease” or “Value-added service” to generate a demand draft or directly transfer the money to the cardholder’s account.
- Or use the “loan on Credit Card” option from Mobile Banking.
#2 Withdrawal Limit
Every credit card has a withdrawal limit, depending on the credit card limit. Kotak Mahindra Bank allows 20% to 40% cash withdrawal on the maximum limit of a credit card. If a credit card has a limit of 1 Lakh, it is possible to withdraw 20,000/- cash. Kotak’s 811 #DreamDifferent Credit Card allows up to INR 25,000/- cash withdrawal per day.
#3 Charges
Since a credit card means a loan, charges apply to every cash withdrawal. Credit card cash withdrawal charges vary from one bank to another. Kotak Mahindra Bank’s Fortune Credit Card can be considered one of the best credit cards in India since its cash advance fee is only INR 199/- on the withdrawal of INR 10,000/– which is a bare minimum. Apart from that, Kotak’s other credit cards with withdrawal benefits charge INR 300/- per INR 10,000/- withdrawal.
#4 Rate of Interest
The interest rate on these cash withdrawals is crucial because it might vary. Kotak Mahindra Bank offers interest charges on cash withdrawals similar to traditional purchase transactions. A person can also enjoy an interest-free period under specific circumstances.
#5 Repayment Methods
The withdrawn cash can be repaid via traditional credit card payment methods. When it comes to small finances’ credit cards, the intermittent banks collect the payment on their behalf. There are both online and offline payment methods available for these types of payments. Kotak Mahindra Bank offers hassle-free repayment to avoid paying late.
#6 Late Penalties and CIBIL Score
Making late repayments of credit card bills, generally, can hit your credit score. It is essential to ensure that the borrowed money has been paid timely to avoid a negative hit on the CIBIL score. Apart from that, late fees are applicable. Kotak Mahindra charges INR 100/- if the outstanding amount is within INR 500/-, and the charge rises to INR 500/- and INR 700/- if the outstanding amount is above INR 500/- and above INR 1000/-, respectively.
#7 Extra Benefits
Just like any other credit card expenditure, cash withdrawals can lead to added advantages such as credit card reward points which can be redeemed later. The 811 #DreamDifferent, Credit Card by Kotak Mahindra Bank, offers one reward point per INR 100/- on different types of spending than online purchases, including cash withdrawals.
Credit cards are beneficial if you have proper knowledge about them. The only thing to be aware of is late payments, which can negatively affect your credit score. Easy cash withdrawals are specialties of Kotak’s credit cards, some of the few credit cards in India that allow cash withdrawal benefits.