Credit cards have evolved into an indispensable tool for managing our finances in today's fast-paced culture. They provide convenience, security, and several benefits.
Credit cards allow you to withdraw cash from ATMs during emergency. While it is one of the fastest ways to get money, it is also one of the most expensive.
In this article, we'll explore what a credit card cash withdrawal is, its benefits and drawbacks, and more. We will learn the step-by-step process to withdraw cash from a credit card, the hidden charges, and why a personal loan through Moneyview might be a much smarter choice for your pocket.
Credit card cash withdrawal allows you to withdraw money from an ATM or bank with your credit card. This means you can withdraw a portion of your credit limit in physical cash. This is very useful in emergencies or when dealing with businesses that do not take credit cards. This convenience is quite handy in an emergency, but it comes with certain costs and interest.
"When withdrawing cash using your credit card, only take out the amount you need. Also, make sure you pay it back as soon as possible to minimize the interest you have to pay."
Withdrawing cash from your credit card is just like using a debit or ATM card. In case of a debit card, you can withdraw as much money as you want from your bank account. The only things to keep in mind are the daily transaction limits and your average monthly balance.
The major difference between withdrawing from a credit and debit card is the "Cash Limit" in the case of a credit card. Most banks only allow you to withdraw 20% to 40% of your total credit limit as cash.
Follow these simple steps to know how to withdraw money from an ATM using your credit card -
You must locate an ATM. It doesn’t have to be your bank’s ATM.
Put your credit card into the ATM card slot of the machine.
Choose your preferred language and select 'Cash Advance', 'Cash Withdrawal', or similar alternatives.
Enter the amount you need and the PIN to confirm the transaction. With some cards, you may additionally receive a one-time password (OTP) to your registered mobile number, which you must input to complete the purchase.
Take your cash and the receipt.
Always check your "Available Cash Limit" on your bank’s mobile app before heading to the ATM to avoid "Transaction Declined" messages.
Here are the features of credit card cash withdrawal:
The basic feature of a credit card is to make card transactions; cash withdrawal is only an additional feature of credit cards supplied by banks.
Users can take cash from their credit card just up to the permitted limit and no more.
The maximum limit of credit card cash withdrawal can differ from bank to bank.
Users will have to pay additional costs along with interest on the withdrawn amount when using a credit card.
Not all banks/credit card issuers offer credit card cash withdrawals.
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Someone or the other must have told you that there are various hacks to withdraw money from a credit card without having to pay any fees. However, it is almost impossible to get "free" cash from a credit card.
Here is the reality of the "hacks" people suggest -
|
Suggested Hack |
Reality |
|---|---|
|
RuPay Credit Cards on UPI |
You can use credit cards on UPI to pay merchants. However, you cannot transfer money to your own bank account or withdraw it as cash for free. |
|
Wallet Transfers (Paytm/MobiKwik) |
Technically, you can move money from a credit card to a wallet and then to a bank. However, these wallet apps charge a 2% to 4% convenience fee, which is often as high as ATM charges. |
|
Rental Payments |
Some apps let you pay "rent" via credit card to get cash in a friend’s account. Banks now charge extra processing fees (1% + GST) on these transactions, making them as expensive as ATM charges. |
When you withdraw cash, you pay two main costs: a Transaction Fee (one-time) and Finance Charges (interest). Unlike your regular shopping, interest in cash starts from the very first minute.
|
Bank |
Cash Advance Fee (One-time) |
Monthly Interest Rate |
|---|---|---|
|
2.5% (Min. ₹500) |
3.75% |
|
|
2.5% (Min. ₹500) |
Up to 3.50% |
|
|
2.5% to 3% (Min. ₹500) |
2.95% |
|
|
2.5% (Min. ₹500) |
3% to 4% |
|
|
₹199 to ₹300 +GST per ₹10,000 |
Up to 3.5% |
|
|
₹199 + GST |
0.71% - 3.85% |
Note: 18% GST is applicable on all fees and interest mentioned above.
Let’s say you withdraw ₹10,000 and pay it back after 30 days. Here is what it actually costs you:
|
Type of Fees |
Amount (Approx.) |
|---|---|
|
Transaction Fee |
₹500 |
|
Interest for 30 days |
₹350 (at 3.5% per month) |
|
GST/Taxes |
₹153 (at 18%) |
|
TOTAL |
₹1,003 |
You spent ₹1,000 just to use ₹10,000 for one month! That is why it should only be used when no other option is available.
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Users must pay additional fees when withdrawing cash using their credit card because it is not a standard feature provided by banks. These additional fees are known as a 'credit card advance fee'. When a user withdraws cash with his or her credit card, a cash advance fee is paid based on the amount withdrawn.
Banks typically charge between 2.50% and 3% of the amount withdrawn for each credit card cash withdrawal transaction.
The cash advance fee will be added to your bill for the following month and included in your billing cycle.
The cash advance cost also includes a finance charge, which is calculated at a rate similar to that of the withdrawn amount. This amount will be levied from the date of withdrawal until the date of payment in full.
It is crucial to note that even if you make many cash withdrawals using your credit card in one day, you will have to pay the cash advance fee for each transaction that you complete, based on the withdrawal amount.
Credit card cash withdrawals usually come with a fee that amounts to a certain percentage of the withdrawn amount, typically 2.50% to 3%. On top of that, a high interest rate is applied to the withdrawn amount, which starts accruing the day after the transaction.
You can reduce the amount of charges you pay for credit card cash withdrawals by using cards that have no cash advance fees. You will, however, have to pay the interest charges as usual.
Here is a list of credit cards with low cash withdrawal fees -
|
Credit Card |
Cash Withdrawal Fees |
Annual Fee |
Yearly Interest Rate |
|---|---|---|---|
|
FREE |
₹12,500 |
42.58% p.a. |
|
|
FREE |
₹20,000 |
35.88% p.a. |
|
|
FREE |
₹12,000 |
45% p.a. |
|
|
FREE |
₹50,000 |
19.56% p.a. |
|
|
FREE |
₹50,000 |
41.75% p.a. |
There are a few alternatives to credit card cash withdrawal. They are:
Aside from the fixed monthly limit, you can use your credit card to take out loans. The application and repayment process is identical to other loans, with different interest rates depending on your card, loan amount, and so on.
Personal loans allow you to borrow funds for a variety of purposes at affordable interest rates. The processing time is considerably reduced, allowing you to address crises and other needs.
If you need a large sum, you can use a financial asset as collateral and get a loan. Some examples of financial assets are mutual funds, equities, and real estate.
You might request a pay advance from your company. If you've been with the same company for a while, your boss may be willing to give you an advance without any fuss.
If you need cash for a medical emergency, a wedding, or home repair, a credit card withdrawal will drain your savings quickly. However, if you take a personal loan from Moneyview’s lending partners, you will save more. Let’s see how -
|
Feature |
Credit Card Cash Withdrawal |
Personal Loan Through Moneyview |
|---|---|---|
|
Interest Rate |
Very high, up to 48% p.a. |
Affordable, starting from 14% p.a. |
|
Repayment |
Must pay back in full next month. Or overdue charges will apply. |
Flexible tenure based on your choice and eligibility, up to 60 months. |
|
Processing Fee |
Minimum ₹500 + GST every time. |
Transparent, one-time fee. Starting from 2% of the loan amount. |
Now that you are aware of how to withdraw money from a credit card, make sure you only do so when you have no other option to deal with an expense. If you use credit cards, a cash withdrawal is a low-cost, rapid, and convenient option.
Unlike typical credit card transactions, which incur interest when bills are not paid on time, credit card cash advances accrue interest from the day of the transaction. To reduce the stress associated with bill payment, withdraw a smaller amount and repay it as soon as possible.Yes, there is usually a daily or per-transaction limit on cash withdrawals, which varies depending on your credit card issuer. Additionally, you can only withdraw 20-40% of your total limit. If your total limit is ₹1 Lakh, you can likely withdraw ₹20,000 to ₹40,000 as cash.
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Disclaimer
The starting interest rate depends on factors such as credit history, financial obligations, specific lender's criteria and Terms and conditions. Moneyview is a digital lending platform; all loans are evaluated and disbursed by our lending partners, who are registered as Non-Banking Financial Companies or Banks with the Reserve Bank of India.
This article is for informational purposes only and does not constitute financial or legal advice. Always consult with your financial advisor for specific guidance.
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