Planning to withdraw cash on your credit card? Watch out for the expenses

You could end up paying not just a steep rate of interest but a hefty cash advance fee as well. In several cases the cost of the loans exceeds 36% on an annualised basis

Rahul, 24, landed himself a new job in Delhi at a multinational company. He had just shifted to the new city from Mumbai, but was soon soon hit a cash crunch brought about by a variety of reasons.

The money he got from his parents was exhausted, pay day was still very far away and, to make matters worse, his landlord began pestering him for some more money for the house he’d already paid advance rent and deposit.

All this meant that he needed some quick cash that he was finding really difficult to raise. So he decided to use his new credit card to sort out everything. Just go to the ATM, insert your card, punch in the PIN number and amount and bingo! You get the money you want so badly.

It was only a few weeks later that he realised that easy liquidity comes with some unpleasant side effects. When Rahul received his monthly credit card bill, he was shocked to see the charges — interest and processing fee — that the card issuer had bunged him with.

Here are some of the charges such loans attract:

Cash advance fee: This fee is charged every time a credit card is used to withdraw cash and typically varies from 2.5% to 3% of the withdrawn amount, subject to a minimum amount of Rs 300 to Rs 500.

Finance charges:

You will also have to pay a finance charge on cash advance fee at a rate similar to that charged on the withdrawn amount. It will be levied from the date of withdrawal till the amount is paid back in full.

Interest:

This is charged at the monthly percentage rate and will be levied from the date of transaction till the repayment is made in full.

Article Source : BS

ATMs run out of notes: Here's the reason behind the massive cash crunch

Although the rate of cash circulation has surpassed the pre-demonetisation level, it is not in tandem with the rate of economic growth

 

Automated Teller Machines (ATMs) across various states are running dry with the present situation reminiscent of demonetisation of high-value currency notes one-and-a-half years back.

States, including Gujarat, Uttar Pradesh, Madhya Pradesh, Bihar, Andhra Pradesh, Manipur and Telangana, have reported shortage of cash at ATMs. A stock-taking analysis submitted by the Reserve Bank of India (RBI) found that the rate of cash withdrawal was much higher than the rate of cash deposits in Andhra Pradesh, Bihar, Karnataka, Maharashtra, Rajasthan, Uttar Pradesh, Madhya Pradesh, and Telangana, among other states. Complaints of cash crunch have been reported from semi-urban and rural regions of the states.

Although the rate of cash circulation has surpassed the pre-demonetisation level, it is not in tandem with the rate of economic growth.

The notes in circulation on November 4, 2016 - four days before the Union government announced demonetisation of Rs 500 and Rs 1,000 notes - were Rs 17.74 trillion. Currency notes in circulation are now at Rs 18.04 trillion. The cash in circulation-to-GDP ratio before demonetisation stood at 11.6% and it has declined to 10.7% at present.

The Centre on Tuesday admitted to the cash crunch and blamed it on uneven distribution of currency by the RBI across states. “There is an issue of disparity. Some states have less currency and the others have more. Government has formed state-wise committee and RBI has also formed a committee to transfer currency from one state to the other. In two-three days, this problem will be resolved,” Minister of State in Finance Shiv Pratap Shukla told TV channels.

Gujarat deputy chief minister Nitin Patel told a newspaper few days back that the state is in touch with the RBI to resolve the issue of cash crunch. “In Gujarat, the currency chests were not getting adequate supply of cash from the RBI,” said an executive director of a public sector bank. ATMs dried up in north Bihar due to issues related to transportation of cash from currency chests located in other parts of the state, officials said.

The Manipur government also wrote a letter to the finance ministry apprising them of acute shortage of cash in the state.

Senior finance ministry officials, who held a meeting with RBI's currency circulation division, banks and state government officials on Thursday, blamed the shortage of cash to various factors, including mismanagement of cash flow by banks, recalibration of ATMs to support the new currency notes, and logistical issues.

Public sector bank executives also said there is a spurt in demand for cash to make payments for agricultural activities as well.

Free withdrawal days are over: ICICI, Axis, HDFC Bank restore cash charges

The new charges would apply to savings as well as salary accounts effective from today

Some banks, including HDFC BANK have begun charging a minimum amount of Rs 150 per transaction for cash deposits and withdrawals beyond four free transactions in a month.

The new charges would apply to savings as well as salary accounts effective from today, leading private sector pla  yer HDFC Bank said in a circular.

The bank would also cap the third party cash transactions at Rs 25,000 per day, while cash handling charges would be withdrawn effective today, the circular added.

In the case of several banks, including ICICI Bank and Axis Bank, these charges came into effect early in January and are same as they were before the demonetisation move announced on November 8, while there is an increase in such fees in case of some others, including HDFC Bank, today onwards.

These charges are for cash transactions in the branches, and not through ATMs.

The move was seen in some quarters as aimed at discouraging cash transactions and furthering the digital payment drive.

For the basic no-frills accounts, maximum four cash withdrawals would continue to remain free and there would be no fees for cash deposits.

According to details on ICICI Bank website, there will be no charge for first four transactions a month at branches in home city while Rs 5 per thousand rupees would be charged thereafter subject to a minimum of Rs 150 in the same month.

The third party limit would be Rs 50,000 per day.

For non-home branches, ICICI Bank would not charge anything for first cash withdrawal of a calendar month and Rs 5 per thousand rupees thereafter subject to a minimum of Rs 150.

For anywhere cash deposit, ICICI Bank would charge Rs 5 per thousand rupees (subject to a minimum of 150) at branches, while deposit at Cash Acceptance Machine would be free of charge for first cash deposit of a calendar month and Rs 5 per thousand thereafter

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