withdrawing cash from an ATM seems a normal thing to do. but the road to credit cards often run deeper than just that because withdrawing from a debit card does not work the same as withdrawing from a credit card. although the transaction process is the same as your debit card, there are certain fees and charges that come attached to withdrawing money from a credit card. let us help you understand how withdrawing cash from a credit card is vastly different from a debit card.
the credit card cash withdrawal feature, technically known as credit card cash advance, allows you to withdraw cash using your credit card at an ATM. this does not involve any documentation or approval from a bank as it is a feature that comes with your credit card. the cash withdrawal feature may not be available on all credit cards, and the withdrawal limit and charges may differ from bank to bank.
withdrawing cash using your credit card is generally discouraged by banks since you are borrowing hard cash. for that reason, there are certain fees and charges associated with credit card cash advance.
cash advance fee
the cash advance fee is the transactional fee that a card issuer charges you for every transaction you make using your credit card. typically, most credit card issuers charge either a certain percentage of the cash advance or a flat fee. top banks typically charge about 2.5% as a cash advance fee, subject to a minimum fee ranging between ₹250 to ₹500. here's a list of some of the popular banks along with their interest rates.
withdrawing money at an ATM using your credit card also attracts finance charges just like regular credit card transactions. these interest charges differ from bank to bank and will be communicated to you at the time of issuing. top banks typically charge between 2.95-3.5% as finance charges for cash advances. some of the finance charges for the most popular banks are listed here.
while there are pros and cons to withdrawing cash from a credit card, let us explore both sides of the coin.
pros of a credit card cash withdrawal
cons of a credit card cash withdrawal
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now that we have explored all that's there about cash withdrawals, let's address some of the frequently asked questions that are always at the back of our minds.
no, the best way to avoid paying a cash advance fee is to avoid taking a cash advance. if you can’t avoid making a cash advance transaction, then you can try minimising the amount that you withdraw. another step you can take to minimise the charges is to repay the borrowed amount as soon as possible. since there is no grace period for a cash advance, interest starts building from the moment you make a transaction.
the maximum amount you can withdraw using your credit card is not the same as your credit limit. the cash limit is typically a certain percentage of the credit limit. banks communicate the cash limit at the time of card issuance as it differs from case to case.
you can withdraw cash using your credit card, the same way you would withdraw funds using your debit card. the only difference is the fees and charges associated with a credit card for every transaction at an ATM.
yes, you can withdraw cash at any bank ATM. however, the cash advance fee may vary across different ATMs.
no, your credit score only gets affected for untimely payment, high credit utilisation ratio, and other such factors.