Here is how transferring money from your credit card to bank account can help you
Needless to say, a credit card comes with various advantages. The most significant one is that it provides you with an option to buy now and pay later. The added attraction is that you get for an interest-free period that can extend to more than 50 days at times. Of course, this facility is available only if you pay your credit card bills on time. There are other advantages like the facility to pay online and offline. You do not have to carry big wads of cash all the time. It also makes it easy to transfer money from credit card to bank account. Let us now see how this particular fund transfer facility benefits you.
1. Save bank charges
Credit cards come with a unique facility known as ‘Cash Advance facility.’ This feature allows you to withdraw money from the ATM using your credit card and its PIN. Generally, credit card issuers stipulate a limit of 20% to 30% of the overall credit card limit as Cash Advance limit. You can either withdraw up to this limit on one occasion or divide it over various occasions. Remember that every withdrawal/usage of cash advance facility entitles the bank to charge you a ‘Cash Advance’ fee.
On the other hand, you can transfer funds from your credit card to your bank account using different means such as e-wallets, Moneygram, Western Union, and so on. The bank does not consider these transfers as cash advance transactions. Hence, they do not levy any charges on the same. Therefore, you get the money in your savings account at a cheaper rate as compared to ‘Cash Advance.’
2. Save on your interest amounts
The ‘Cash Advance’ facility does not come free to the cardholder. We have seen that you pay a cash advance fee. Apart from this fee, you have to pay interest @ APR (annual percentage rate) from Day 1 until the time you repay the money to the bank. Now, the APR is a substantial figure that can go up to 3% per month. Under such circumstances, you have to pay a considerable amount of interest to the bank for availing the cash advance facility.
If you had used the transfer of funds feature on your credit card, you could have saved interest on the cash advance amount. It is because the transfer of funds is not the equivalent of a cash advance according to the credit card issuing banks.
3. Improve your credit rating
The Cash Advance amounts are repayable at the time of payment of the credit bill for the month. There are no provisions to carry forward this balance to the subsequent months. The billing system is such that the banks demand this sum separately in its entirety along with the minimum due amount for the other expenses. In other words, the concept of paying the minimum amount due is not available to the Cash Advance facility. Under such circumstances, you have to pay the entire bill failing which the banks treat it as a default. The banks have to report every such incident to the credit rating agencies. Any default in payment of a loan affects your credit rating.
Use the facility of transferring from your credit card to your bank account and continue availing the benefit of the minimum amount due concept. You can still pay the minimum amount due and keep your credit card limit alive. It also benefits you because the banks do not report this matter to the credit rating agencies. Therefore, it protects your ratings from dropping down.
4. Use funds in an emergency
You can transfer the credit card amount to your bank account in a crisis. A situation can arise when you might have to meet specific obligations. You might need funds in your account to pay your utility bills or service your loan installments. You can withdraw money from an ATM using your credit card to cater to your requirements. However, we have seen that it can be an expensive affair because of the interest and cash advance fee component.
Many apps are available that allow you to transfer money from your credit cards to your bank account in small installments. Some apps have a limit of Rs 2000 per day whereas some might have more. Multiple apps allow you to transfer the necessary funds to your account to cater to your emergency requirements. As banks do not treat such refueling of e-wallets as cash withdrawals, it is a good idea to take advantage of the fund transfer facility from your credit card to your bank account.
Transferring funds from your credit card to your bank account is an ingenious method to use credit cards without paying interest and cash advance fees. It is a legitimate method as well. It can benefit you in many ways. We have seen that in the previous paragraphs.
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