A cash advance is a feature made especially for an emergency where you can still take advantage of your credit even if you directly cannot use it. Credit cards have now become of utmost necessity to increase your financial status and purchasing power. But there are situations where credit card payments are not allowed. You can then either make the payment through cash or a debit card. This is where the cash advance feature comes into action or use.
This cash advance feature allows you to withdraw money from your ATM using your credit card just like the money is yours. This will allow you to make payments even when you cannot use credit cards. Making the payment easier than ever for you, but there is a cost to it. The interest rates, cash advance fees, and other charges are levied when the transaction is made. This means the moment you make the transaction; it will charge you a cash advance fee along with that interest rates starts getting applied to your transacted amount from Day 1.
But just the way there is a credit limit, there is a limit for cash advances as well. This means you are allowed to withdraw cash at a certain amount from the ATM. This cash limit is decided by the bank and only the bank can make changes to your actual limit.
Cash limit – The maximum limit of cash withdrawal with your credit card, is cash limit. This cash limit is different for every other credit card and credit card holder. And the cash limit usually ranges from 30% to 40% of the credit limit.
Yes, even ICICI Bank has this feature present with their credit cards. But there is a huge difference between ICICI and the other credit cards in the market. The interest rates and cash advance fees levied by ICICI are the lowest in the financial market.
The financial charges levied on the cash advance feature are very high in the market. This feature is comparatively very costly. These charges can differ from bank to bank and even with the type of card you hold. For the majority of credit cards, ICICI bank levies a cash advance fee of 2.5% on the withdrawn amount or Rs. 300 whichever is higher. And the interest rate on the amount from the day it was withdrawn till the day it was repaid in full is simply 2.95% monthly and 41.7% annually.
Looking into the interest rates in the normal credit cards by ICICI Banks such as Instant Platinum, Instant Gold, and Fixed Deposit Instant Credit Cards have around 2.49% monthly and 29.88% annual as interest rates on the cash advance. But all the other ICICI credit cards except for the above-mentioned ones have 3.40% monthly and 40.80% annual interest rates. However, credit cards such as Jet Airways ICICI Bank Credit Cards can have interest rates of around 3.50% per month and 42% annually. And in case of default, the rates are maximum which is 3.5% monthly and 42% annually.
The bank has the sole right to change the interest rates at any point for all of the credit cards issued by them.
The cash advance is a very useful feature that can be used in emergencies but due to the cash limit, the amount is limited. And there is no interest-free period for a cash advance which makes this feature pretty expensive as well in comparison to other features provided by the credit card industry.