Credit card cash withdrawals are also known as cash advances. Although credit card cash withdrawals allow you instant fund access during times of need, they come with charges and interest. Thus, you must be aware of these credit card cash withdrawal charges.
This comprehensive guide covers a detailed breakdown of how much charges for credit card cash withdrawal you need to pay and other relevant information.
Credit card cash withdrawal or cash advance is a process that allows cardholders to withdraw cash from an ATM using their credit card. You don’t need any extra permission from your bank or the credit card issuer.
This service helps you during emergencies but comes at a price. It includes fees and interest rates over the amount you need to repay that you have withdrawn using your credit card.
However, all credit cards don’t offer this feature, and the terms vary depending on the card issuer.
Yes, there is a limit for the credit card cash withdrawal and it’s not equal to your credit limit. This implies, that even if you are in need, you cannot withdraw 100% of your credit limit as cash from an ATM.
The credit limit signifies the maximum amount of money you can spend using your credit card. However, the cash advance limit is just a portion of the overall credit limit that you can withdraw using your credit card at select ATMs. This cash withdrawal limit typically ranges between 20% to 40% of your overall credit limit.
Therefore, if you have a credit card with a credit limit of Rs. 2 Lakhs, your cash advance limit for that card will vary between Rs. 40,000 to Rs. 80,000.
It’s true that every credit card comes with multiple fees and charges. Even credit card cash withdrawals aren't exempt from the same. Below we have listed the different types of credit card cash withdrawal charges that you might encounter.
Typically ranges from 2.5% to 3% of the withdrawn amount.
Minimum fee often applies, usually between Rs. 300 to Rs. 500.
For example, if you withdraw Rs. 10,000, a 2.5% fee would be Rs. 250, but if the minimum fee is Rs. 500, you will be charged Rs. 500
It is reflected in your billing statement.
Credit card ATM withdrawal charges might apply over and above your cash advance fee if you use an ATM that does not belong to your card-issuing bank.
These fees are separate from the cash advance fee.
These fees are levied just like your regular credit card usage fees.
They are levied from the date of your cash withdrawal till the date you’ve made the payment for the cash withdrawal using your credit card.
Interest on cash advances starts accruing immediately from the date of your withdrawal.
There is no interest-free period on such cash advance charges.
Interest rates typically range from 2.5% to 4% per month (30% to 48% per annum).
If you’re making the cash withdrawal on foreign soil, additional foreign transaction fees may apply.
You have to pay late payment charges on the outstanding balance if you don’t repay the amount you withdrew in full.
Late payment fees usually vary between 15% to 30% of the withdrawal amount every month.
Now that you know how much charges for credit card cash withdrawal are levied by banks, let’s find out how you can withdraw cash advances using a credit card.
The process is exactly similar to using a debit card.
Step 1: Visit any ATM kiosk with your credit card.
Step 2: Follow the instructions on the screen for cash withdrawal.
Step 3: You can withdraw cash using a credit card at any ATM kiosk of any bank irrespective of the credit card issuer.
However, you must be aware of the credit card ATM withdrawal charges that banks might levy if your card issuer is different.
Never use the cash advance facility at random or just as an alternative to your debit card usage. Read the terms and conditions of your credit card before you use the cash advance facility.
Before you avail of a credit card cash advance facility, it’s best to understand the potential upsides and downsides of this service.
You get immediate access to cash.
Useful in case of financial emergencies.
No need for bank approvals or additional documentation.
High fees and interest rates make it an expensive option.
No interest-free period, meaning you start accumulating costs as soon as you opt for it.
Frequent use can negatively impact your credit score.
When it comes to credit card cash withdrawal charges, accumulating them isn’t a good idea. Follow these tips to manage your credit card cash withdrawals and minimize the charges accrued.
Limit Withdrawals: Use cash advances sparingly and only in true emergencies. Don’t fall for the temptation to use your credit cards for cash withdrawals in place of your debit cards. Understand that each has its specific purpose.
Repay Quickly: Pay off the withdrawn amount as soon as it’s possible for you. It will help you to minimize interest charges.
Compare Fees: Check the fees and interest rates of different credit cards to choose the most cost-effective option for cash withdrawals. Read the terms and conditions on credit cards to know about the cash advance limits and charges.
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Credit card cash withdrawals offer a quick solution for you to access funds during emergencies, but they come with significant costs. Understanding the associated charges and using this feature sparingly and smartly can help you manage your finances better and avoid unnecessary expenses.
Always read the terms and conditions of your credit card to be fully aware of the charges involved and try to minimize them by not resorting to the cash advance facility unless you’re in desperate situations.
What is the cash withdrawal fee for a credit card?
Is there a fee for withdrawing from a credit card?
Can we withdraw money from a credit card without any charges?
If you wish to withdraw cash using a credit card at an ATM, it usually comes with a slew of charges. However, if you get your hands on a credit card that doesn’t charge a cash advance fee, then you might be able to withdraw cash using it without levying any extra charges.
Another option is to use e-wallets like Mobikwik to transfer cash from your credit card to your wallet or your account and then withdraw it using your debit card at an ATM. This process will allow you to withdraw cash without any charges.
Can I transfer money from my credit card to my bank account?
What is the limit of cash on a credit card?
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