Your credit card cash withdrawal limit determines how much instant cash you can get from your nearest ATM. This facility is available with most credit cards, but the terms and conditions vary depending on the issuer’s policy and the card you have.
As such, it is important to know this limit, late payment fee, transaction charges, issuer’s terms, and other details. This information will help you easily decide whether it’s a feasible option.
Here’s a quick look into the cash withdrawal facility, its limit, and other crucial details.
What is Credit Card Cash Withdrawal?
Also known as cash advance, it is a supplemental option available for credit card holders. It allows you to withdraw cash without any documentation or approval. This withdrawal amount adds to your credit card dues, which you can pay with your monthly bill.
However, this facility is available only up to the determined limit and generally attracts interest from the day of the transaction. However, some issuers may offer an interest-free period. Regardless, you need to be mindful when opting for it.
Credit Card Cash Withdrawal Limit: An Overview
The credit card cash withdrawal limit is a part of your overall card limit, generally up to 40%. So, if you have a credit card with a limit of ₹90,000 and the issuer permits cash withdrawal to up to 30%, your credit card cash withdrawal limit is ₹27,000.
Apart from your total credit limit, the cash withdrawal limit is affected by the following factors:
- Daily and Transaction Limits: To prevent misuse or unauthorised transactions, the issuer sets these limits. Since you cannot transact beyond these limits, it affects how much cash you can withdraw.
- Over-the-Counter Limits: Some issuers allow you to withdraw cash from their branch. However, the limit in this case may vary from the one set for ATM withdrawals. So, your mode of withdrawal also affects how much instant cash you can access.
Charges for Cash Withdrawal from Credit Card
Issuers generally levy the following charges on cash withdrawals through credit cards:
- Interest Rate: You pay interest on the withdrawal amount from the date of the transaction or after the interest-free period
- Cash Advance Fee: This is a fixed amount issuers charge for credit card cash withdrawals, and it depends on the issuer as well as the type of card
- Late Fee: If you don’t repay the cash advance within the due date, the issuer may levy a late payment fee
- ATM Fee: If you exhaust your free ATM transactions for the month, the issuer will levy this charge
Cash Withdrawal: Pros and Cons
Here are the benefits you can enjoy with credit card cash withdrawal.
- This option provides 24/7 access to instant cash advances from any nearest ATM
- You can get cash without any lengthy process, making it ideal for emergencies
- If applicable, the interest-free period allows you to access cash affordably
- Cash withdrawals don’t affect your credit score
Here are some drawbacks you must consider before withdrawing cash with a credit card.
- Issuers levy cash withdrawal fees among other charges
- The interest rate for cash withdrawal is usually higher than the APR
- The outstanding amount continues to attract interest until repaid in full
- There are no reward points for withdrawing cash from the credit card
- Failure to pay all credit card dues, including cash advance, will affect your creditworthiness
Important Factors to Consider
Here are some tips to enjoy the maximum benefits of this facility:
- Review all the fees and conditions before withdrawing to ensure its affordability
- Check the available credit card cash withdrawal limit to ensure you get sufficient funds
- Try to pay your cash advance as soon as possible to keep the interest to a minimum
- Use credit cards with longer interest-free periods to keep borrowing costs low
- Ensure that you can pay the dues before withdrawing cash to keep your score intact
- Keep your credit utilisation within 30% to maintain your creditworthiness
When it comes to your credit card, do you best to make well-informed decisions and avoid unnecessary costs. You should try to utilise your credit card cash withdrawal limit only during emergencies to avoid adding to your financial burden.
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