Were you stuck in a situation of financial crunch? Need cash in case of emergency, or to pay your bills? Here, you have credit cards at your disposal, with the help of which you can withdraw cash and fulfill all your financial needs in case of an emergency. Credit cards have become one of the crucial financial tools in the life of individuals these days. With the increased number of features and benefits that credit cards provide, they have become more of a necessity item than a luxury item.
In addition to allowing you benefits to pay using your credit card at various online and offline stores, credit card issuers also allow you to withdraw cash using a credit card. The process of withdrawing cash from a credit card is as simple as withdrawing cash from a debit card, but cash withdrawal from a credit card attracts a lot of fees and charges and hence is not advisable. Therefore, there are quite a lot of details that an individual should be aware of once before he withdraws cash using his credit card.
Cash Advance – Meaning
Another name for credit card cash withdrawal is cash advance. This is an additional feature that credit card issuing companies provide to credit cardholders. Whenever a credit cardholder is in urgent need of funds, i.e., cash, he has the privilege to withdraw cash from his credit card. It is a type of short-term loan, for which, credit cardholders will have to pay high interest and fees. There is a certain predefined limit, set by the bank (different from bank to bank), beyond which you cannot withdraw cash. This is generally 30%-40% of the available credit limit. This feature might not be applicable on every credit card and the withdrawal limits, financing charges, and cash advance fee might differ from bank to bank. Therefore, a credit cardholder should check with their respective credit card issuer once before initiating a credit card cash withdrawal.
How To Withdraw Cash Using A Credit Card
Withdrawing cash from a credit card is quite a simple task. It is as easy and effortless as in the case of a debit card. You will first have to check with your credit card issuer whether or not you have the cash advance facility available on your credit card. Once you are sure that the facility is available on your card, you can follow the instructions given below and can successfully withdraw cash using your credit card –
- Visit the nearest ATM.
- Insert your credit card into the card insertion slot given in the ATM.
- Enter the amount that you would like to withdraw.
- After this, enter your PIN.
- The requested amount will be dispensed through the cash dispensing zone.
Charges Applicable to Credit Card Cash Advance Transactions
Though the process is as simple as in the case of the debit card, but in the case of a debit card, it is your own money that you withdraw through an ATM but in the case of a credit card, it is a type of loan that you take from the bank. Therefore, you have to pay hefty charges with respect to this withdrawal. Following are the details of the charges that credit cardholders will have while they withdraw cash using their credit card –
Cash Advance Fee –
A Credit Card cash advance fee is a fee that is charged by credit card companies from credit cardholders in lieu of accessing the cash advance facility available on their credit card, through an ATM. Cash advance fee differs from bank to bank but is generally a specific percentage of the amount withdrawn but subject to a minimum amount in cash for small transactions.
Cash Advance Fee Charged by Top Banks
There are so many credit card issuers in the country that offer a wide range of cards in different categories and with different fees & charges. The following are some of the major issuers and the cash advance fee charged by them:
|Name of the Bank||Credit Card Cash Advance Fee|
|SBI Credit Cards||2.5% of the amount withdrawn subject to a minimum of Rs. 300|
|HDFC Bank Credit Cards||2.5% of the amount withdrawn subject to a minimum of Rs. 500|
|ICICI Bank Credit Cards||2.5% of the amount withdrawn subject to a minimum of Rs. 300|
|Axis Bank Credit Cards||2.5% of the amount withdrawn subject to a minimum of Rs. 250|
|Citi Bank Credit Cards||2.5% of the amount withdrawn subject to a minimum of Rs. 500|
Whenever you swipe your credit card for a particular transaction, you are given an interest-free period of 30-45 days. This is a time period for which you do not have to pay any interest. Bill payments made beyond this date will attract interest charges. But these criteria are quite different in the case of cash withdrawal. Interest starts accumulating on such cash withdrawal transactions as soon as you withdraw cash from your credit card. The interest charges differ from bank to bank and card to card. These generally range from 2.5% to 3.5%.
|Name of the Bank||Monthly Interest Rate|
|SBI Credit Cards||Up to 3.5%|
|HDFC Bank Credit Cards||1.99% to 3.5%|
|ICICI Bank Credit Cards||Up to 3.6%|
|Axis Bank Credit Cards||2.95% to 3.5%|
|Citi Bank Credit Cards||3.1% to 3.5%|
Pros and Cons of Credit Card Cash Withdrawal
There are several advantages as well as disadvantages of withdrawing cash from a credit card. Some of these are mentioned below:
Following are some of the benefits of credit card cash withdrawal –
- With the help of a credit card cash advance facility, you get instant access to liquid cash. Because of the easy availability of ATM’s and having a credit card in hand, you can have cash at any time and at any place. SO, it’s the best alternative to cash in emergency times.
- While you have to submit various documents and await approval when you would like to avail of any kind of personal loan, in the case of withdrawing money using a credit card, you do not need to submit any documents or wait for any kind of approval. You just have to visit the nearest ATM and withdraw cash.
Where there are advantages, there are disadvantages as well. Below mentioned are some of the disadvantages of withdrawing cash using a credit card –
- The interest starts piling up on such transactions from the very first day of the cash withdrawal day till the day amount is paid back in full. Because of this, it becomes very expensive to withdraw cash from a credit card.
- Whenever cash is withdrawn from a credit card, in addition to the interest charges, you have to pay a cash advance fee as well, which is a certain percentage of the amount that you withdraw using your credit card.
- You do not get any interest-free period in case of credit card cash withdrawal which otherwise you get with other credit card transactions.
Now that you know that you can withdraw cash from your credit card, you should not make it a routine affair as it is very expensive. It should be made only when it is very important to do so. Cash withdrawal attracts a lot of charges such as interest fees and cash advance fees and sometimes you will have to pay additional fees while withdrawing cash using another bank’s ATM. Furthermore, you do not have to get any interest-free period in case of cash withdrawal. Therefore, cardholders have to be very cautious while availing the cash advance facility and should withdraw cash only when there is a dire need.