Cash Advance - What Is Cash Advance on a Credit Card

You can use your credit card to withdraw cash during emergencies. The facility is called a cash advance on a credit card

Most people know how to swipe a credit card in stores or to make online payments for digital purchases, but few are aware that they can also withdraw cash using their credit cards. Most credit cards come with a cash advance feature, which allows you to withdraw cash using your credit card in case of emergencies.

Cash advance has many benefits, but you must be aware of the costs that come with it. Let us take a microscopic look at everything you must know about this facility.

What is a cash advance on a credit card?

A credit card cash advance enables credit cardholders to obtain cash from the bank's ATM using their credit cards. Because we usually use credit cards for card payments, the ability to withdraw cash may feel like a bonus feature. Cardholders who use the service can withdraw cash up to a limit but must pay it back with interest and other fees.

Also, a cash advance may not be available on all credit cards, and the cash withdrawal limitations and finance charges may also differ from one card to another.

What are the fees on cash advance on a credit card?

A credit card cash advance fee applies to each cash withdrawal on the credit card, which differs from bank to bank. You should check the fees and charges on your credit to have the knowledge about these charges. After withdrawing cash the charge appears on your subsequent billing statement. Interest charges on the withdrawn amount are also added to the cash advance fee. This interest is equal to the interest rate on your credit card and is charged from the date of withdrawal until the entire amount is repaid.

If you make several cash advance transactions in a single day, you will be charged for each transaction independently. If you are not careful about these charges, they can land you in debt.

Yet, there are few banks like IDFC FIRST Bank, which do not charge any interest on withdrawn cash up to 48 days. You should always opt for such credit cards, as you do not end up paying extra for the emergency cash withdrawals you might have to make.

Does cash advance impact your credit score?

Credit card cash advances are not be disclosed to the credit bureaus. The total amount owed and the failure to pay it gets recorded as a whole. But using a credit card cash advance will not hurt your credit record.

Nevertheless, sometimes you may find it hard to maintain your monthly payments owing to the high credit card interest rates for cash advances (accrued every day). Failure to settle even the minimum amount due may hurt your credit score and may appear on your credit record.

You can choose from different types of IDFC FIRST Bank credit cards and apply online using the mobile banking app as these cards come with interest free cash withdrawal up to 48 days. Even if you fail to repay after 48 days, the interest rates on IDFC FIRST Bank credit cards are so affordable, that you definitely end up saving more.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.