• There’s no interest-free period
  • You will be charged for each withdrawal
  • Opt for a Credit Card that charges lower fees in such an event
  • A good repayment record helps you negotiate with the Card issuing company

In addition to swiping Credit Cards at stores or using them online, you can also use them to withdraw money from ATMs. This facility, called cash advance, is helpful when you need to pay cash, or when the store doesn’t have a point of sale (POS) terminal.

Almost all Credit Cards offer this facility to customers. However, before you use your Credit Card at an ATM, here are some important things to know.

  • There’s no interest-free period

    Generally, when you swipe your card at a POS terminal or use it for shopping online, you get an interest-free period before the borrowed amount is to be repaid. This period varies from Card to Card. If you fail to pay the borrowed amount within this period, an additional penalty is charged to your Card account.

    When you swipe your Credit Card at an ATM, you don’t get this interest-free period. Interest is levied right from the moment you swipe your Card to withdraw cash. So, you don’t get any chance to repay the borrowed amount without paying interest. The interest rates levied vary across banks and financial institutions. This ultimately pushes up the final payable amount.

  • You will be charged a fee for each withdrawal

    When you swipe your Credit Card at an ATM, not only do you lose out on the interest-free period, but you may also need to pay a fee for each withdrawal. This fee could be in percentage or a flat fee as decided by the Bank or the Card issuing company.

    So, if you use your Card to withdraw cash twice, the final amount to be paid will include the total amount of cash withdrawn and the charges levied for two withdrawals. This pushes up the amount you have to pay back. Also, please note that your Cash withdrawal limit may be significantly lesser than your total Credit limit.

  • The way forward

    There are occasions when you need to swipe your Credit Card at an ATM. Therefore, it makes sense that before availing a Credit Card, you find out the applicable fees in such a scenario. Opt for a Card, which along with other benefits, charges a lower fee for such a transaction. A good repayment record helps you negotiate with Card issuing company to lower charges in such an event.

    A sound relationship may also result in waiving off the fee charged. So, ensure you pay all your Credit Card dues on time and have a neat repayment record. This goes a long way in availing extra benefits, such as waiver of ATM withdrawal charges, when the need arises.