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Credit Card Cash Withdrawal

Credit card cash withdrawal is a facility through which you can withdraw cash from an ATM using your credit card. However, keep in mind that you can withdraw cash from your credit card only up to the maximum permissible limit. This limit is called credit card cash withdrawal limit and it may vary from bank to bank. Do note that not all banks offer the facility for credit card cash advance on their cards. If your card has this feature, you don’t need any additional bank approvals for credit card cash withdrawal. 

Charges Associated With Credit Card Cash Withdrawal

There are different types of charges that you may incur when you withdraw money from credit cards. Here are some of the main charges that you should be aware of.

  • Credit Card ATM Withdrawal Charges:

This fee is levied for using ATMs to withdraw cash with your credit cards. The amount again varies from one bank or credit card issuing entity to another.

  • Credit Card Cash Advance Fee:

This fee is levied by credit card issuers whenever you use the credit card to withdraw cash. The fee is generally charged as a percentage of the amount withdrawn, subject to certain limits. Depending on the bank and the type of card issued, the credit card cash advance fees on top cards generally vary between 2.5% and 3% of the amount withdrawn, subject to a minimum of ₹250 to ₹500. This fee usually reflects in the next month's billing cycle. Credit card cash advance fees also attract charges that are quite similar to the amount withdrawn. It is also to be noted that the credit card charges will be levied from the date of withdrawal till the date of payment in full.

  • Interest on Cash Withdrawal from Credit Card:

Cash withdrawal essentially involves using a part of your credit limit. Since this is similar to using your credit card to spend money, Credit card withdrawal also attracts finance charges or interest, apart from the cash advance fee. The finance charge is levied on the amount withdrawn and will reflect in your credit card statement.

The credit card interest rate on cash withdrawal from a credit card varies from bank to bank and the card type. Usually, it ranges from 2.5% to 4% per month and is communicated at the time of credit card issuance. However, before attempting cash withdrawal from your credit card, you should check the cash withdrawal interest rate as it may be dynamic and subject to change at the bank’s discretion.

  • Interest Levied on Credit Card Cash Advance by Top Banks 

The interest rates on cash advance for top bank credit cards such as Citibank Credit Card, Axis Bank Credit Card, Bajaj Finserv RBL Bank Credit Card, SBI Credit Card and ICICI Credit Card are generally within a range of 35%-40% annually.

Difference Between Credit Card Cash Advance Limit and Credit Limit

The maximum amount that you can spend on the credit card is known as the credit card limit. The credit card cash withdrawal limit, on the other hand, is the maximum amount of cash that you can withdraw using the card. This limit is also known as the credit card cash advance limit and forms a part of the total credit limit on the card.

While the credit card cash withdrawal limit varies from bank to bank, it usually ranges between 20% to 40% of the card’s total credit limit. Do note that the available credit card ATM withdrawal limit reduces after each cash withdrawal. The limit is restored when the withdrawn amount is repaid in full.

How to Withdraw Money Using a Credit Card

The process of withdrawing money from a credit card is very easy and quite similar to cash withdrawal using a debit card. You can visit your nearest ATM and withdraw the required amount in a few easy steps, as given below.

  • Step 1: Insert the credit card into the card slot at the ATM.

  • Step 2: Enter the credit card PIN.

  • Step 3: Enter the amount you wish to withdraw from your card.

  • Step 4: Click ‘Submit’.

You will receive the cash immediately.

What is the Impact of Credit Card Cash Advances on Credit Score

Credit card cash withdrawal generally doesn’t have an impact on your credit score. What may happen is that the monthly payments may sometimes become difficult to maintain due to the high-interest rates (charged daily), additional fees, and charges imposed on credit card cash withdrawals. Additionally, when you fail to make even the minimum payment on your credit card, it can severely impact your credit score. In short, as long as you make regular timely payments, there will be no negative effect on your credit score due to cash advances.

Advantages & Disadvantages of Credit Card Cash Withdrawal

Here are some of the main advantages and disadvantages of credit card cash withdrawal that you should be aware of:

Advantages:

  • The main advantage of the credit card advance feature is that it provides instant cash. As you are aware, ATM machines are installed on every corner of most streets across the country, it is quite quick and easy to withdraw cash whenever the need arises.

  • Like we see in other forms of cash withdrawal facilities like personal loans or similar loans, there is no tedious documentation or endless approvals required by the cardholder. All you need is your card which can be used at the ATM to withdraw cash.

  • The ability to extend your credit card limit is dependent on consistent spending habits, a good track record of payments without late payments or defaults, and a decent track record of repayments. The cash withdrawal limit can easily increase once the issuing authority enhances your credit limit.

Disadvantages:

  • Each time you make use of the credit card cash withdrawal facility, a minimal fee is charged by the bank which further adds to the financial charges.

  • There is also an interest rate levied on cash withdrawals. Though it is similar to the interest charged on card transactions, the difference is that the interest is charged right from the time of the transaction till it is paid in full to the bank.

  • Additionally, there is no interest-free period in credit card cash withdrawals and the interest will continue to accumulate making it quite expensive for the cardholder to manage their financial expenses

  • Credit card transactions that entail card advances are not eligible for any reward points or cashbacks no matter how high the amount might be.

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FAQs on Credit Card Cash Withdrawal

✔️Is the facility of cash withdrawal available on all credit cards?

No. Credit card cash withdrawal is a facility you can find on  select cards only. It is communicated to you when you apply for a credit card and also mentioned in the welcome kit if your card application gets approved. You can also go through the features of the card to understand whether this facility is available.

✔️What happens if I withdraw cash from my credit card?

If you withdraw cash from your credit card, the available cash limit against your card is reduced. You are also required to pay a fee for availing the facility.

✔️Can I withdraw money from my credit card without charges?

No. Your bank will charge a credit card cash withdrawal fee every time you avail the cash withdrawal facility.

✔️Can we withdraw cash from a credit card from an ATM?

Yes. Credit cards that offer the cash withdrawal feature can be used at an ATM to withdraw cash.

✔️How do I know the cash limit of my credit card?

The cash limit on your credit card will be conveyed to you at the time of card issuance. You can also log into your netbanking account to get an idea about your credit card cash advance limit. Alternatively, you can reach out to an executive on the issuing entity’s customer support team by calling the customer care helpline and inquire about your credit card ATM withdrawal limit.

✔️How to make a credit card payment specifically towards a cash advance?

If the balance that is outstanding on your credit card includes only the cash advance made, then any payment you make towards your credit card will be used to pay off your cash advance. Hence, if you want to make credit card payments towards cash advance alone, you would need to clear all other dues against your card.

✔️When should withdrawn cash be repaid and how?

Interest is levied on withdrawing money from your credit card. It is, therefore, advisable to clear your credit card cash advance dues at the earliest to reduce the interest charged on said withdrawal.

✔️Do I need to pay an additional fee for cash withdrawal using a credit card?

The credit card cash advance fee is a one-time fee that is charged when you withdraw money using your credit card. Apart from the cash advance fee, you may also incur finance/interest charges on cash withdrawal at ATMs using your credit card.

✔️Is it a good idea to withdraw cash from a credit card?

No. Cash withdrawal is an additional feature of the credit card and should be used only during emergencies. This is because you will have to pay additional credit card cash withdrawal charges along with interest on the amount withdrawn using a credit card.

✔️How much do credit cards charge for cash withdrawal?

The credit card cash withdrawal charges vary from one bank to another. Broadly speaking, it can range from around 2.5% to 3% of the amount withdrawn, subject to a minimum amount of ₹300 to ₹500 as credit card cash advance fee.