Difference Between Credit Limit And Cash Limit

Fast Processing ✓ Great Discounts & Offers ✓ Easy EMI Facility | Apply for Credit Card now! 

Credit Limit vs Cash Limit

A credit card comes with different limits, including credit card limit, cash limit, available credit limit, daily limit, etc. Often, people get confused between the difference between credit limit and cash limit. Simply put, a credit limit is the total credit amount the card’s balance is allowed to spend. On the other hand, a cash limit is the maximum cash you can withdraw from an ATM using your credit card. Let us understand a little more about these two terms and the main difference between credit limit vs cash limit.

What is a Credit Limit

Credit limit or credit card limit can be defined as the maximum balance you are allowed to spend on your credit card. The credit limit is decided at the time of issuing your card. The card issuer determines the same based on the applicant’s monthly income, age, job stability, and other eligibility parameters. Once you have exhausted your credit limit, you cannot carry out any credit card transactions. In some cases, the bank allows you to make transactions but levies heavy interest rates and charges on them. 

What is a Cash Limit

Credit card cash limit or cash advance limit is the maximum amount of cash you can withdraw from an ATM using your credit card. This cash advance is generally against the available credit limit on your card. However, cash withdrawals from credit cards do not have an interest-free period and start accruing interest from the very first day. The card holder must pay back the amount at the earliest along with interest and other charges such as cash advance fee, as applied by the bank. The credit card cash limit is generally capped at 20%-40% of the credit limit. Thus, if your credit limit is ₹2,00,000, then the maximum cash advance you can take out is between ₹40,000-₹80,000, depending on the bank’s policies.

Difference Between Credit Limit and Cash Limit

Credit Limit

Cash Limit

It is the maximum amount you are allowed to spend with your credit card

Is the maximum cash you can withdraw from a bank or ATM using your card

Transactions beyond your credit limit might fail.

Cash advances are usually calculated as a percentage of the credit limit.

No extra penalties are charged if you spend within your credit limit.

Banks might charge a cash advance fee for making cash withdrawals.

The credit limit is decided based on your income, age, job stability, and other eligibility factors.

Most banks allow a cash limit to be 20%-40% of your total credit limit. 

FAQs on Difference Between Credit Limit and Cash Limit

  • ✔️What does a credit limit for cash mean?

    Credit card cash limit is the maximum amount you can withdraw against your credit card. The limit is mostly capped at 20%-40% of your credit card limit.

  • ✔️What is the difference between credit limit for cash and available credit for cash?

    Credit limit for cash is the total cash you can withdraw with your credit card. On the other hand, the available credit limit for a credit card is the available balance remaining after making spends using the total credit card limit.

  • ✔️Can I use my credit limit for cash?

    Yes. Cash advances can be taken against your credit card limit. However, banks might have a cap on the amount of cash withdrawn and may add a cash advance fee for availing the facility.

  • ✔️Is the cash advance limit the same as the credit limit?

    No. Cash advance limit and credit limit are two different concepts.