Credit Card Cash Withdrawal – Charges and How to Withdraw

credit card cash withdrawal charges

Credit Card Cash Withdrawal is one of the easiest ways to fulfill your urgent cash requirements. You can withdraw money using a credit card with a click of a button. However, you need to aware of terms and applicable charges.

Let me share one recent incident with you. One of my relatives has got a new job in Mumbai. He shifted to Mumbai before few days. He started facing a cash crunch problem. In order to fulfill his growing expenses, he used the Credit Card Cash Withdrawal Facility. He visited ATM, inserted card, punch the PIN number and he got required amount. He was very happy. But, this happiness was short lived. He got a credit card bill a few weeks later. The credit card bill contains a massive interest amount and processing charges. He is clueless about how to repay the entire amount.

From the above example, we can say that credit card cash withdrawal is an easy and most convenient way to address quick cash need. But, you have to be aware of charges applicable on the same. In this post, we will look at what is credit card withdrawal? Credit Card Cash withdrawal charges, How to withdraw cash using a credit card and benefit, drawback associated with it.

Also Read – 10 Best Credit Cards in India to Save more Money

What is Credit Card Withdrawal?

A credit card withdrawal is a facility extended to credit card holders. By using this facility customer can withdraw cash at the bank ATMs. It is also known as a credit card loan or cash advance facility. This facility is given within India as well as outside.

This facility is not enabled on all credit cards. It is an additional facility given to some selected customers based on the policy. A credit card company applies a withdrawal limit which is a certain percentage of a credit limit. A customer needs to payback the withdrawal amount along with interest and applicable fees.

Credit Card Cash Withdrawal Charges – Fees & Interest

Various charges applicable on credit card cash withdrawal are given below.

Cash advance fee

A cash advance fee is charged every time a credit card is used for withdrawal of cash. The cash advance fee varies from 2.5% to 3% of the withdrawal amount, subject to a minimum amount. It is also known as a transaction fee.

Finance Charges/Interest

When you normally use your credit card you will get an interest-free period. You need to clear your dues within a specific period. If you don’t pay your dues in time, the bank levies interest on the outstanding amount. However, in case of cash withdrawal via credit card bank does not offer any interest-free period. A finance charges or interest is applicable from the day you withdraw the amount until the amount is fully paid. It is known as finance charges or interest amount. The interest rate is in the range of 2.5% to 4% per month.

Late Payment Charges

If you fail to clear your dues in time, you need to pay late payment charges to bank/credit card companies. The late payment charges vary from bank to bank.

Charges applied by some of the major banks on Credit Card cash withdrawal are given below.

Bank

Transaction Fees

Finance Charges
SBI2.5% or Rs.300, whichever is higher at domestic ATMsUp to 3.35% per month
ICICI Bank2.5 % (minimum Rs.250 at ICICI bank ATMs and Rs.350 for other ATMs)2.95% per month
HDFC Bank2.5% (minimum Rs.500)1.99% – 3.5% per month
Axis Bank2.5% (minimum Rs.250)2.5% – 3.25% per month
Citibank2.5% (minimum Rs.500)3.1% – 3.5% per month

How to Withdraw Cash using Credit Card?

You can withdraw cash using a credit card by visiting the ATM center. The process is similar to withdrawing cash using a debit card. The difference is using a debit card you can withdraw money from your own bank account. Whereas in credit card you are taking a loan or cash advance.

Let’s try to understand this by example. Suppose you withdraw Rs.25000 by using your credit card. Cash advance fee on your card is 2.5%. This means you need to pay extra Rs.625/- as cash advance fee. In addition to cash advance, you need to pay finance charges/interest. Let us say finance charge applicable on your card is 3%. This means you need to pay 3% of Rs.25000/- as finance charges. The charges here would be Rs.750. So, the total pay-out from your pocket would be Rs.1375. This is 5.5% per month. You can decide it is cheap or costly.

Benefits

  • Easy and convenient because ATMs are available everywhere and accessible 24×7.
  • No Paperwork or permission is required to avail this facility. You just need to use your credit card at the ATM to withdraw cash.
  • Withdrawal is allowed multiple times within credit limit.

Drawbacks

  • As no interest-free period allowed these types of withdrawal are expensive.
  • You need to pay a transaction fee as well as interest rate.
  • You will not get any reward points for using this facility.

Over to You –

Do you use a credit card cash withdrawal facility?

Do you think this facility is useful?

Do share your views and experience in the comment section given below.

Article by Raviraj

Raviraj is the man behind moneyexcel.com. He is graduate in finance, engaged in blogging since 6 years. Moneyexcel blog is ranked as one of the Top 10 Personal Finance Blog in India. He is not affiliated with any financial product, service provider, agent or broker. The purpose of this blog is to spread financial awareness and help people in achieving excellence for money. Please note that the views expressed on this Blog/Comments are clarifications meant for reference and guidance of the readers to explore further on the topics. These should not be construed as investment advice or legal opinion.

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