Credit Card Withdrawal

As much as you would want to keep your credit card expenses and fees to a minimum, there will always come a time when you will need extra cash.
 

   
This may come when you’re travelling and you failed to exchange enough money or when the merchant just does not accept credit cards as a form of payment. This may not be a smart move, as most experts would say. However, if it cannot be helped, do you know how much exactly it will cost you to make a credit card withdrawal from an ATM?

Recent trends show that more than a million people are making a credit card withdrawal to pay for their bills, loans, mortgages. In a country where plastic credit cards are held with high regard, this scenario is not surprising anymore. However, the question is whether cardholders are aware of the impact of credit card withdrawal to their pockets and their credit rating.

Studies from uSwitch show that 69% of cardholders who make withdrawals don’t really know how much exactly a credit card withdrawal costs them. 12% of cardholders even believe that it’s the same as withdrawing from a debit card. Furthermore, another 13% believes that a credit card withdrawal from an ATM in a foreign country only packs a single fee, which is absolutely wrong. Making a cash advance from a foreign ATM will not only be charged with a transaction fee, it will also cost a foreign currency exchange fee and a higher interest rate sans the grace period.

The first thing that cardholders should remember about a credit card withdrawal is that it has a slightly higher interest rate than the one applied on purchases. This feature, which is often termed as cash advance, also incurs a transaction fee of 3% to 5% depending on the credit card company. Another important note about credit card withdrawal that should be kept in mind is that they are not eligible for the interest-free period which applies to purchases. Hence, the interest that you pay will start accruing from the day you make that credit card withdrawal.

You should also take note that credit card companies usually allocate payments first to the cheapest debt. So, if your company does impose a higher APR for cash advances than purchases, you should be aware that the credit card withdrawal debt will not be paid until the balance on purchases is paid in full, So, the cash advance, which is the more expensive debt will be with you for a longer period.



  

Source: Credit Cards For People With Bad Credit Rating


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