Cash limit or cash advance limit refers to the maximum amount of cash that can be withdrawn using your credit card. This limit is usually a certain portion of your credit limit.
Credit cards are typically used for card transactions but as an additional service, banks allow cardholders to withdraw cash from an ATM.
So, how much cash can you withdraw using your credit cards? That depends on your credit card issuer. Most issuers allow cardholders to withdraw 20%-40% of the credit limit as cash.
You can check the cash limit for your credit card on your card’s online banking platform.
There are several benefits to being able to withdraw cash with your credit card:
Emergency Funds: In case of a situation where you need immediate access to cash, you can use your credit card to withdraw money from any ATM at any time of the day.
No Collateral Required: Unlike other types of loans, there is no collateral required to withdraw cash using your credit card.
No Additional Applications: You do not need to apply for an additional credit line. You can withdraw cash as long as you have not reached your cash limit.
Convenience: In case other methods of payment fail, your credit card allows you to withdraw funds from a nearby ATM.
Credit limit and cash advance limit are two different things. Let us understand the difference between the two.
| Credit Limit | Cash Limit |
|---|---|
|
Credit limit is the maximum amount that you can spend using your card. |
Cash limit is the maximum amount of cash you can withdraw using your credit card. |
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Credit limit is decided based on multiple factors such as income, age, job stability, etc. |
Cash limit is decided by banks and usually a portion of your credit limit. |
|
There are no extra fees charged for spending within your credit limit. |
Withdrawing cash with your credit card attracts extra fees and/or additional interest rates. |
Here are the steps for withdrawing cash from an ATM using your credit card:
Step 1: Visit an ATM.
Step 2: Insert your credit card and pick the language of your choice.
Step 3: Choose “Cash Withdrawal” or a similar option.
Step 4: Enter the amount you wish to withdraw.
Step 5: Enter your PIN to confirm the transaction. (Some credit cards may send you an OTP on your registered mobile number)
Step 6: The ATM will dispense the cash once the transaction has been validated.
While it is convenient to be able to withdraw cash with your credit card it is advisable to use the facility sparingly as it incurs the following costs:
Interest rate will apply to the withdrawn amount from the date of withdrawal to the date of repayment. The rate will be similar to your credit card interest rate.
When withdrawing cash most banks will charge 2.5% to 3% of the amount or a minimum of Rs.300-500. Below is a table of the fees charged by banks for cash advance:
| Credit Card Issuer | Cash Advance Charges |
|---|---|
| State Bank of India | 2.5% |
| Axis Bank | 2.5% |
| RBL Bank | 2.5% |
| IndusInd Bank | 2.5% |
| HDFC Bank | 2.5% |
| Bank of Baroda | 2.5% |
| HSBC Bank | 2.5% |
| Yes Bank | 2.5% |
| Kotak Mahindra Bank | 2.5%-3% |
| ICICI Bank | 2.5%-3% |
| Standard Chartered Bank | 3% |
Cash advance is a convenient facility, especially during emergencies, that is offered by credit card issuers. However, it is important to understand the costs associated with cash withdrawals through this facility.
Before using this service consider factors including alternative sources of funds and long-term implications of the fees charged and the interest rates. Use the cash advance facility judiciously and be mindful of the terms and conditions set by your credit card issuer.
Cash advance is usually capped at 20%-40% of your credit limit. For example, if your credit card offers 30% cash advance and your credit limit is Rs.1 Lakh then you can withdraw Rs.30,000.
You can check the cash limit on your credit card in the terms and conditions, or you can check on your card’s online banking account.
Withdrawing cash with your credit card will not affect your credit card but the high fees and interest rate may increase your monthly payment.
Yes, you can use your credit card to withdraw cash from an ATM.
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