Credit cards offer a lot of benefits and convenience but there are a few things that you must follow to keep your credit score in good health. Paying the entire amount that is accrued on your credit card in a billing cycle within the due date and not using it for cash withdrawals are among the cardinal rules of usage. This is because missing payments and cash withdrawals attract high interest rates.
In fact, credit cards charge interest right from the day you use it to withdraw cash at the ATM. But how about credit cards that do not charge any interest for cash withdrawals for the entire billing period that can be 45-50 days long? IDFC First Power RuPay, IDFC First Power Plus RuPay Select and Axis Bank Burgundy Private credit cards do not charge any interest for cash withdrawals.
While IDFC Bank’s credit cards allow interest-free cash withdrawals for up to the due date but levy a transaction fee, no cash withdrawal charges or interest is levied till the payment due date for the Axis Bank Burgundy Private credit card.
“To avoid hefty charges, you can opt for the IDFC FIRST Bank FIRST Power+ credit card that comes with 0% interest charges on cash withdrawals up to the due date. All you need to do is to pay the cash advance charge of ₹199+ GST. 0% Interest on ATM cash withdrawals until the due date,” IDFC First Bank said. The bank charges a cash withdrawal fee of ₹199 (plus GST) for every transaction.
To be eligible for IDFC FIRST Power/FIRST Power+ Credit Card, you have to meet the following eligibility criteria
•You must be at least 21 years old
•You must be an Indian citizen
•You must have a healthy credit score
•Your credit usage ratio must be within an acceptable level
•You must have an annual income of ₹3 lakh or more
Axis Bank Burgundy Private Credit Card eligibility criteria
This card is designed for high net-worth individuals and is available only to those who are enrolled in Axis Bank’s ‘Burgundy Private’ programme. No cash withdrawal charges or interest is levied till the payment due date for this credit card. Here is the eligibility criteria:
Eligibility criteria for new account/relationship, calculated at a Customer ID level or Family ID#level:
Savings account: Maintenance of a minimum Total Relationship Value (TRV) of ₹ 5 crore* by 12 months of account/relationship initiation.
Salary account: Net monthly salary credit** of ₹10 lakh or more
On-going eligibility criteria for existing account/relationship, calculated at a Customer ID level or Family ID#level:
*Complete benefits of Burgundy Private proposition can be availed, once the Total Relationship Value (TRV) requirement of Rs.5 crore is met (excluding demat).
**Average of last 3 months
But should you withdraw cash using credit cards even if they do not charge any interest for up to the payment due date? Unless you are in need of urgent cash for emergency purposes, you should not use the credit card for withdrawing cash at ATMs.
Banks strongly advise against using credit cards for cash withdrawal in their advisories. “Frequent cash withdrawals and high utilisation of the cash advance limit can impact your creditworthiness. This behaviour often signals financial distress to lenders. So, banks and financial institutions might view you as a higher-risk borrower. This perception can make it harder for you to get loans or new credit lines later,” according to Yes Bank.
You must understand your credit card billing cycle before withdrawing cash using it. If you withdraw cash close to your payment due date, you would have very little time to repay it. Though a credit card cash withdrawal will not affect your credit score immediately, it can have an adverse impact if bills pile up. Cash withdrawals increase your credit card bill and credit utilisation ratio. If you struggle to pay the bill in full, it will have a negative impact on your credit score. So, it is wise to be cautious while using the credit card for withdrawing cash.
Allirajan M is a journalist with over two decades of experience. He has worked with several leading media organisations in the country and has been writing on mutual funds for nearly 16 years.