Credit Card: Credit cards can be incredibly useful in today’s world. When you find yourself short on cash, they can help you manage your expenses easily. One of the major benefits of credit cards is the grace period for repayment. If you pay off your balance during this time, you won’t incur any interest charges. Additionally, many credit cards come with various offers and discounts, which contributes to their popularity.

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Not only this, but credit cards also allow for cash withdrawals through a feature known as cash advance. While this can be convenient, it can also be quite costly. If you make a cash transaction with your credit card—intentionally or by mistake—you might face significant financial repercussions. Once the transaction is made, regretting it won’t bring you any relief.

Cash Transactions with Credit Cards: How much cash transaction is done through it?

All credit card users have the option to withdraw cash, but the amount you can access depends on your card’s limit. Most banks permit cash withdrawals of 20 to 40 percent of your total credit limit. For example, if your credit limit is Rs 5 lakh, you could withdraw between Rs 1 lakh and Rs 2 lakh in cash.

Disadvantages of withdrawing cash from a Credit Card

1. High Charges: While you can withdraw cash, it comes with a fee ranging from 2.5 per cent to 3 per cent. If you withdraw Rs 1 lakh, you could end up paying between Rs l2,500 and Rs 3,000 in fees, which can be quite frustrating.

2. No Interest-Free Period: Unlike regular purchases, cash advances do not benefit from an interest-free grace period. This means you’ll start accruing interest on the withdrawn amount immediately.

3. Impact on Credit Score: Frequent cash withdrawals can negatively affect your CIBIL score. Therefore, consider using this option only in extreme situations when no other alternatives are available.