Many banks offer a cash withdrawal facility on credit cards. While this seems like an attractive feature offering immediate cash, it is important to know all the terms and conditions before making a credit card cash withdrawal. So, this post covers the fees and charges levied on credit card cash advances as well as how to withdraw cash using your credit card.
What is credit card cash withdrawal?
Banks often offer a cash withdrawal facility on credit cards. The cash limit is usually a part of the credit limit (for example 20%), but is never equal to the credit limit.
Whether or not a credit card offers cash advance facility, the cash limit and the charges levied depend on numerous factors. The policy of the particular bank, the type of card and the customer’s past credit history are some of the factors. This is entirely at the discretion of the bank.
You can find out if your credit card allows cash withdrawal and your limit from your bank.
Credit Card Cash Withdrawal Charges – Fees and Interest
It’s best to avail the cash advance facility on your card only in an emergency because it can prove quite expensive.
Transaction Fee – Every time you withdraw cash from the ATM using your credit card, the bank charges a transaction/withdrawal fee. This fee varies from bank to bank and also from one type of card to another. It is usually about 2.5% to 3% of the amount withdrawn, subject to a minimum amount.
Finance Charges/Interest – When you use your credit card for transactions at merchant outlets or online, the bank gives you an interest-free period. Only after this interest-free period ends (if you don’t pay your bill), the bank levies interest on the outstanding amount due. However, when it comes to credit card cash advances, the bank doesn’t offer any interest-free period. Hence, interest is levied from the very first day till the amount is fully repaid.
The interest charged by banks on the amount withdrawn ranges from 2.5% to 4% per month. This can make it very expensive as you may have to pay interest as high as 48% per annum.
Late Payment Charges – If you don’t pay your dues in time, in addition to the above two, late payment charges ranging from 15% – 30% are levied.
Charges levied by some of the major banks as of October 2018
|Bank||Transaction Fee||Finance Charges|
||Upto 3.35% per month (40.2% per annum)|
|ICICI Bank||2.5 % (minimum Rs.250 for eBOR and ICICI bank ATMs and Rs.350 for other ATMs)||2.95% per month (APR 41.75% per annum)|
|HDFC Bank||2.5% (minimum Rs.500) (excluding Infinia)||1.99% – 3.5% per month|
|Axis Bank||2.5% (minimum Rs.250)||2.5% – 3.25% per month|
|Citibank||2.5% (minimum Rs.500)||3.1% – 3.5% per month|
Pros and Cons of Credit Card Cash Withdrawal
- Easy and convenient because ATMs are available everywhere these days and can be accessed 24×7.
- Also, it doesn’t require any additional paperwork or permissions.
- Since there is no interest-free period, cash advances prove very expensive.
- You don’t get any reward points for credit card cash withdrawals.
How to withdraw cash using your credit card?
- You can withdraw cash using your credit card in the same way as you would withdraw cash using your debit card at an ATM.
- You can withdraw from other banks’ ATMs as well, however that may involve some additional charges. (Please check with your bank first to find out.)
- It’s important to know your card’s cash limit as well as daily maximum withdrawal limit before withdrawing cash from the ATM.
Keeping in mind all the above points, it’s best to use the cash withdrawal facility of your credit card only in emergencies and avoid it otherwise.