Credit cards are very useful and simple to use payment instrument. Did you know that there are two distinct ways to raise credit card money and that both have different costs? Find out all about this operation.
Right now, if you are looking for a credit card, there are things to keep in mind. You should consider not only its advantages – such as the ability to earn airline miles, discounts or cashback and earn points – but also the costs and commissions you may have to pay for transactions with this financial product.
What transactions can you do with a credit card?
It is possible to make payments for goods and services as well as withdraw money by credit card. But let’s look at these operations in detail.
When paying for credit card goods and services, please note that the amount spent will not be automatically deducted from your current account, but from the credit card ceiling.
This payment can be made in two different ways: 100% and without interest, on a date previously agreed with the bank, or in installments (the latter option means paying interest).
With regard to withdrawing money by credit card, you can do it in two different ways, depending on the type of card you have.
On the one hand, if your credit card has a dual function – simultaneous debit and credit – you can withdraw money from your current account at an ATM. On the other hand, if you have only the credit function, you can only raise money on credit – a procedure called cash advance.
How does cash advance work and what is it for?
Cash advance is the term used for the feature that allows you to withdraw money by credit card and thus have access to the desired amount immediately and without interest. However, resorting to this option has costs.
By withdrawing money by credit card you are withdrawing this amount from your ceiling, which is the maximum credit limit made available monthly to your card and which is agreed between the cardholder and the financial institution.
On the other hand, if you need to withdraw credit card money outside the European Union, the operation becomes more costly. In addition to a fixed commission on the withdrawal, the following fees apply: on withdrawal, processing, currency conversion, service and transaction value. To all these fees is added the Stamp Duty.
However, not all is bad news. There are credit cards that for example the consumer from these costs, as the case of Cofidis card with the “For 1 more $” service. So if you travel frequently and want to avoid unnecessary costs, opt for this credit card:
Cautions when raising credit card money
As the popular saying goes, “prevention is better than cure.” So we leave you with some tips and precautions to avoid problems – such as card fraud or theft – when raising money by credit card.
1. Associated Costs
As already mentioned, the cash withdrawal on credit has associated expenses. If you urgently need a certain amount, you can opt for an online credit, for example.
If you travel abroad, note that cash advance has even higher costs outside the European Union. It should be noted that some debit cards also incur money withdrawal costs outside Portugal.
If you prefer, you can also choose to choose a card with both credit and debit functions. In this way you can withdraw money by credit card, but by withdrawing this amount from the current account directly instead of removing from the ceiling, avoiding extra expenses.
2. Watch the ATM
All cares are few. Please note the ATM machine and if you notice any signs of vandalism, do not use it as your card may be retained. Also avoid less safe and low moving places.
3. If you prefer, make transactions via mobile phone
Mobile applications – such as MB Way – not only allow you to make bank transfers immediately, but also to withdraw money without the card. Just perform the entire operation in the app and then go to an ATM and enter the code generated by MB Way to withdraw the desired amount.
In conclusion, it is important to note that not all credit cards are created equal. Those with the debit function allow you to withdraw money by credit card without withdrawing the amount from the ceiling. If you do not have this option, the cash advance feature will be used, which entails expenses in terms of fees and associated commissions.
As such, it is important to know all the costs and commissions associated with credit withdrawal, thus avoiding higher charges on your bank statement.