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A credit card comes with different limits, including credit card limit, cash limit, available credit limit, daily limit, etc. Often, people get confused about the difference between credit and cash limits on credit cards. A credit limit is the total credit amount available on a credit card. On the other hand, a cash limit is the maximum amount you can withdraw from an ATM as cash against a credit card.
A credit limit or a 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 execute any credit card transactions. In some cases, the bank allows you to make transactions but levies interest rates and charges on them.
The cash limit on a credit card 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 The cardholder must repay the amount withdrawn as cash against a credit card along with interest and other charges.
Usually, the limit is capped between 20% and 40% of the sanctioned limit. If you have a maximum credit limit of ₹2 Lakhs, the maximum cash you can withdraw ranges between ₹40,000 and ₹80,000 based on the credit card issuer’s policies.
Here are the key differences between credit limits and cash limits:
Credit Limit |
Cash Limit |
|---|---|
It is the maximum amount you are allowed to spend with your credit card |
It is the maximum cash you can withdraw from a bank or ATM using your card |
Transactions beyond your credit limit may be unsuccessful |
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 |
Now that you are aware of credit and cash limits, do proper research and compare various cards before selecting a specific one. On Bajaj Markets, you can apply for some top credit cards offering exciting perks. Check your eligibility and choose one that meets your requirements.
A cash limit on a credit card is the maximum amount you can withdraw against your credit card. The limit is mostly capped at 20%-40% of your credit card limit.
The credit limit for cash is the total cash you can withdraw using 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.
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.
No. Cash advance limit and credit limit are two different concepts.
Spending money beyond your credit limit could bring you temporary relief but it does come with long-term ramifications. This will put you into debt with fees, charges, and penalties to pay. It is best not to spend more than your credit limit allows.
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Posted on 16 May
Roshani Ballal
Academy by Bajaj Markets
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