It is anticipated that between 2020 and 2025, the credit card market in India would grow at a rate of 25%. The primary reason for facilitating the same is predicted to be the growing popularity of cashless transactions and their convenience.
Additionally, as more individuals are inclined towards the benefits that credit cards offer, they also seek to make the most of features that come with them. For example, many card users now transfer money from credit card to bank account. Nevertheless, funds transfer from credit card has its share of pros and cons.
Pros of fund transfer through credit cards
Here a list of advantages of transferring funds through credit card -
- Individuals can increase the reserve of cash at hand.
- They can meet the urgent cash requirement effectively.
- Users can transfer funds to the savings account of any financial institution.
- Funds can be transferred anywhere in the world.
- The online process of said transfer is less cumbersome and swift.
Notably, some NBFCs may allow cardholders to avail the facility via a contact with their credit card customer care representative as well.
On the contrary, there are specific disadvantages of such fund transfer as well.
Cons of fund transfer through credit cards
Here’s a list of disadvantages –
- The rate of interest levied on transferring money through credit card is relatively high.
- There is a significant amount of processing charge involved with the said fund transfer.
- Besides rigid restrictions, international fund transfers attract a higher processing fee and rate of interest.
- Usually, the transaction takes 1 to 5 days to appear in a savings account. Until then, one cannot be too sure about its status.
- Borrowing a large sum of money from credit cards can lay a negative impact on the cardholders' credit score as it affects the credit utilisation ratio.
- Lenders do not extend an interest-free period on fund transfer of such nature.
However, credit cards like RBL Bank SuperCard provide interest-free durations to cardholders on making ATM withdrawals.
Therefore, one must weigh both pros and cons, and factor in their repayment capacity before proceeding with such a transfer facility and seek alternative options that are available.