How to Withdraw Cash from Your Credit Card

In times of emergency, you may consider withdrawing cash from your credit card. 

Taking cash from your credit card or cash advance is a fast way of having emergency funds in case of an emergency. However one must be aware that cash advances on credit cards have some charges and interest rates that can make the process costly if one does not do it correctly.  

In this blog, we will explore a step-by-step process of taking cash from your credit card and what one should be aware of before he or she proceeds to do so. 

What is a Credit Card Cash Withdrawal? 

A credit card cash withdrawal is when you take out cash using your credit card, either from a bank or an ATM. Instead of purchasing merchandise, cash withdrawals will provide you with liquid cash that you can access from the available balance of your credit card. Usually, though, this type of transaction may incur higher fees and interest than any regular credit card transaction. 

How to Withdraw Cash from Your Credit Card 

Withdrawing cash from your credit card is straightforward but should be done with caution. Here’s how you can do it: 

Check Your Cash Advance Limit 

• The limit imposed on cash advances is different from the credit limit set by banks. Usually, cash advances are limited to a certain percentage of the overall credit limit. 

• You can confirm your cash advance limit through the bank’s mobile app, net banking, or inquiry via the customer service representative. 

Find the Nearest ATM 

• You can withdraw cash from an ATM that is on the network of your credit card (Visa, Mastercard, or RuPay). 

Insert Your Credit Card 

• Insert your credit card into the ATM and enter the PIN. 

Select the Cash Withdrawal Option 

• Select either cash withdrawal or credit card withdrawal options. 

• Enter an amount within your cash withdrawal limit. 

Finish the Process 

• Approve the transaction, collect your cash. 

• The cash you’re withdrawing will be debited from your available credit limit. 

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Advantage of Cash Withdrawals 

Cash withdrawal using credit cards has its costs, though it has few benefits: 

• Immediate Access to Cash – It is a way of obtaining cash quickly in emergencies. 

• No Approval Process – There is no need for the hassle of taking an approval process required by personal loans, as you can simply withdraw cash from your credit card. 

• Convenience – At any ATM that uses your credit card network, you can withdraw cash. 

• Global availability – Cash can be withdrawn in the ATMs anywhere in the world.  

Disadvantage of Cash Withdrawals 

Although withdrawing cash from a credit card can be easy, it can also be cumbersome for the following reasons: 

• High Fees and Interest Rates: A cash advance is expensive due to high withdrawal fees and interest rates. 

• No Interest-Free Period: Interest on cash advances begins to accumulate right from the day of withdrawal, whereas on normal credit card transactions, one gets a grace period.  

• Negative Impact on Credit Score: The recurrent cash withdrawals may negatively affect your credit score by signaling financial problems to the credit bureaus.  

• Reduced Credit Limit: The amount withdrawn will be deducted from your available credit limit until you repay it. 

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Fees and Charges for Credit Card Cash Withdrawal 

Withdrawing cash from a credit card comes with several charges, including: 

Cash Advance fees  

• This convenience entails a charge of 2.5% to 3.5% on the amount withdrawn (with a minimum fee regime, generally ranging from ₹300 to ₹500). 

Finance Charges (Interest Rate)  

• Interest will be charged from the day of withdrawal until repayment is made in full. 

• The rates vary at 2.5% to 4% per month (30% to 48% annually). 

ATM Transaction Fee 

• Some banks may charge for using their ATMs, particularly if the ATM is from a different bank. 

GST on Fees and Interest 

• GST is levied (currently at 18%) on the entire fee applicable in connection with cash advances. 

Things to Keep in Mind Before Withdrawing Cash 

• Do not Withdraw Frequently: Because of high-interest rates, frequent withdrawal becomes expensive.  

• Pay Back Quickly: There is no free-interest period on cash advances; if you pay back your cash advance quickly, that will earn you the least charges.  

• Read Reverse: They are all different for each bank. Fees, limits, and rules for cash withdrawal all vary considerably.  

• See Alternatives: If urgent cash is required, consider a personal loan or overdraft facility, which may offer lesser interest rates. 

Conclusion

Withdrawing or withdrawing money from your credit card In India, it is typically considered one of the easiest options for an emergency mode of finance. It has, however, very high charges or interest rates. Alternatives like personal loans and credit card EMI options are always recommended before opting for such a facility. In case you have to, just be timely and repay the amount to avoid high-interest costs.