Customer Alert! Credit card users receiving SMS for cash withdrawal fee reversal: Here is the catch

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Updated: October 7, 2019 7:33:42 PM

If the credit card company is offering to waive the cash advance fee during the festive offer, know the catch before you swipe your credit card in the ATM machine.

free-money, Credit Card , cash advance , Credit Card Cash Withdrawal, cash withdrawal limit, withdraw cash from ATM, interest free period , finance chargesCredit cards come with a spending limit and a separate cash withdrawal limit also called cash advance, to allow users to withdraw cash from any ATM using their cards.

Credit Card Cash Advance: It is festive time and offers, deals and discounts are all over the place. Some banks are sending a communication through SMS and email to their credit card customers informing them of the various cash-back and other offers available on the cards. One such offer relates to the reversal of cash withdrawal fee on transactions done during this festive period. Many card users are receiving messages to get 100 percent reversal on credit card cash advance fee. If this is what you have received, it could be a trap. Read on to find out why.

Credit cards come with a spending limit and a separate cash withdrawal limit also, called cash advance, to allow users to withdraw cash from any ATM using their cards. Unlike spending that you do while shopping with a credit card, there is a fee associated with such cash withdrawals. If the credit card company is offering to waive this cash withdrawal fee during the festive offer, know the catch before you swipe your credit card in the ATM machine.

On the spending that you do at a merchant establishment such as Amazon, Flipkart, BigBazaar or at any of your neighbourhood store, there is generally an interest-free period of up to 51 days. It is always better to pay the entire outstanding balance on the due date and avoid rolling over of credit. The interest rate charged on outstanding dues if rolled over to next month is 36 per cent to 42 per cent depending on the bank.

In addition to spending, a credit card allows one to withdraw cash from the ATMs at the time of need. However, there is a cash advance fee of about 3 per cent of the amount of cash withdrawn that one has to pay once it is billed in the credit card statement. The SMS, email being received talks about the reversal of this fee for the credit cardholder. But, if you think, its free-money for you till the next billing cycle, here’s the catch!

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The cash advance fee is only one part of the story. The credit cardholder is required to pay interest or finance charges equal to the charges on revolving credit, on the cash withdrawn from day one and there is no interest-free period on the same. Such charges are levied from the date of withdrawal till the date it is paid in full. In all credit cards of all banks, the finance charges on cash advances are applicable from the date of transaction until the payment is made in full. On a cash withdrawal of Rs 20,000, there could be a fee of Rs 600, which will get reversed but the interest charges will be levied from the very first day. It’s not free-money for you that you can repay anytime you want.

With a credit card in your wallet, the temptation to go for impulsive buying should be avoided at all cost. And, if you are falling short of funds, explore all other options before accessing ATM for withdrawing cash using a credit card.

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