Credit Card Cash Withdrawal

With the credit card cash withdrawal or cash advance facility, you can withdraw cash from an ATM. While credit cards are primarily for purchases, cash withdrawals are an added feature that they offer. 

 

As this facility provides a quick and easy solution to manage your financial requirements, it comes with a charge. Since the fees and charges vary with different credit card companies, check the charges before withdrawing funds. 

Banks and NBFCs generally assign a credit card cash withdrawal limit. It is the maximum amount of cash that you can withdraw using your credit card. You can find this limit mentioned online or in the terms for the card type. 

 

On the other hand, credit limit refers to the maximum amount of credit that your card company offers to you. Note that all credit cards come with a credit limit. 

 

It is based on various factors, such as your credit score and history, relationship with the credit card company, and the type of the credit card you use. However, not all credit cards come with a credit card cash withdrawal limit. 

 

If cash withdrawals are a priority for you, you can apply for a credit card online that offers this facility. The cash withdrawal limit on most cards will be a percentage of the credit limit. 

 

This can range between 20% to 40% of the total credit limit. For example, if your total credit limit is ₹2 Lakhs, your cash withdrawal limit can be anywhere between ₹40,000 and ₹80,000.

 

This facility is only offered if you are eligible for it. Regular payments of bills and a low credit utilisation ratio can help you qualify for this facility. 

While cash advances provide access to quick funds, understanding the associated costs is essential before opting for this facility. Here are some of the credit card cash withdrawal charges that may be levied: 

• Cash Advance Fee 

A cash advance fee is usually about 2.5% to 3% of the total cash withdrawal amount. The credit card provider is likely to levy it on every cash withdrawal you make. 

 

It may also be subject to a minimum amount, ranging from ₹250 to ₹500. Your credit card statement will also reflect this amount. 

• Interest 

Credit card withdrawals are subject to interest, which financial institutions typically levy on a monthly basis. Interest rates can range anywhere from 1.99% to 4% per month. 

 

Remember that the interest-free period you enjoy with card transactions is not applicable for cash withdrawals. Interest will start accruing the day you withdraw the cash till the day you pay it in full. 

• ATM Fee

As a credit card user, you will likely be allowed a fixed number of ATM transactions per month, depending on the credit card company. Once you have exhausted your free withdrawals, the bank will charge an ATM maintenance or interchange fee. 

 

Making withdrawals from an ATM of another financial institution can also attract additional charges.

• Late Payment Fee 

In case you do not repay your full withdrawal amount on the due date, the card company may levy late payment charges. 

 

Disclaimer: Please note that the figures mentioned are only indicative; actual rates and charges may vary depending on your credit card issuer’s policies. 

Refer to the following table to know the charges for the cash advance facility levied by the financial institutions partnered with Bajaj Markets:

Refer to the table given below to know the interest rates on cash advances that various credit card providers charge:

Financial institutions apply a cash advance fee when you withdraw cash from an ATM using your credit card. Let’s understand this better through an example.

 

Suppose you have a credit card with a limit of ₹1,00,000 for the month. You decide to withdraw ₹5,000 from an ATM using your credit card due to an urgent need for cash.

 

Now, let's assume your credit card issuer charges a cash advance fee of 2.5%. In this case, for withdrawing ₹5,000, your cash advance fee would be:

 

₹5,000 x 2.5% = ₹125

 

Apart from the ₹5,000 you withdrew, you will also be charged ₹125 as a cash advance fee. Additionally, interest starts accruing on the withdrawn amount, unlike regular credit card purchases where an interest-free period is applicable.

 

Summary:

• Withdrawal amount: ₹5,000

• Cash advance fee: ₹125

• Interest: Starts accruing immediately on ₹5,000

You can withdraw cash using your credit card with ease at an ATM. Here is how to get a cash advance using a credit card:

1. Find an ATM that allows you to withdraw cash using a credit card

2. Insert or swipe your credit card at the ATM

3. Select the option for ‘Cash advance’ or ‘Cash withdrawal’

4. Enter the amount you wish to withdraw

5. Confirm the transaction by entering your PIN and OTP to validate the transaction

6. After validation, the ATM will dispense the amount

7. Collect your cash and credit card from the machine

With the credit card cash withdrawal facility, you can enjoy these advantages:

Quick Access to Funds

It can be helpful during emergencies by offering immediate financial assistance when you need it the most.

Convenience

ATMs available around the clock make withdrawing cash using a credit card convenient. You can get the cash within a few minutes by following a few simple steps.

 

Here are some disadvantages associated with this facility:

High interest rates

You need to pay interest on the amount you withdraw. The interest starts accruing as soon as you withdraw the cash. 

Cash Advance Fees

Credit card companies levy a cash advance fee when you use this facility. It is typically a percentage of the amount you withdraw, and adds to your cost.