Credit Card Cash Withdrawal: How To Withdraw? Check Limit, Charges And Interest Rates

Credit cards are a way to fulfil your wish for some big purchases while keeping the option to pay for the amount in instalments. Many people also use credit cards for cash withdrawals. What must be kept in mind is that some charges could be levied on the card. There are other factors you need to consider as well before using your credit card to make a cash withdrawal.

Certain limits are imposed by banks on credit card cash withdrawals. Customers should note that the cash withdrawal limit on credit cards may not be the same as the credit limit on the same card. Credit limit is the maximum amount the borrower can use, while cash withdrawal limit is the total cash they can withdraw using their credit card. Most banks have 20-40% of the credit limit as the cash withdrawal limit.

Most credit card issuers levy a charge of 2.5-3% of the transaction amount on cash withdrawals. Other charges can be levied as well. This includes finance charges, which are imposed from the date of the withdrawal till the repayment is made.  

The interest charges are levied at the pre-defined rate for your credit card. However, the key difference between making payments using credit cards and cash withdrawals is that you don’t get the grace period when you take a cash advance. The interest charges are applied immediately after the cash withdrawal.  

If you go over five withdrawals in a month, you will have to pay an ATM fee as well.  

The transaction can incur a late payment fee as well if the amount is not paid back on time. Bank-specific charges may be imposed on the card as well.

The process for withdrawing cash is the same as using a normal card. Go to the nearest ATM of your bank and input your PIN to get the amount you want.

No reward points: You cannot earn any reward points on cash withdrawals, unlike other purchases. This means you cannot access benefits from banks, such as lower rates or interest, or discounts.

Increased burden of payments: The different charges levied by lenders can increase your debt in the long run if you keep making regular withdrawals via credit cards.

No interest-free period: The interest on cash withdrawal starts from the day of the transaction itself. There is no scope for postponing the interest levy. 

Using credit cards for cash withdrawals could lead to high debt burdens due to various charges and hefty interest rates. It’s advisable to avoid credit card cash advances as far as possible. If you need cash for an emergency, opting for a quick personal loan could be a financially prudent decision.