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Can We Withdraw Cash From A Credit Card?

Cash Withdrawal From A Credit Card

Credit cards have transformed how individuals in India think about getting loans and other credit services. A credit card has numerous functions, one of which is the cash advance feature, which offers cardholders quick liquid cash. Unlike other loans, the credit card cash advance option does not require additional bank permissions or documents.

What Is The Difference Between A Credit Card Cash Advance Limit And A Credit Limit?

While credit limit refers to the maximum amount that may be spend on a particular credit card, cash limit refers to the maximum amount of cash that can be withdrawn using a credit cards. A credit card’s cash limit is often include in the credit limit offer. Most banks provide a cash limit of 20% to 40% of the overall credit limit. For example, if a card’s total credit limit is Rs. 1 lakh, you can use the card to withdraw up to Rs. 20,000 to Rs. 40,000 in cash. The remaining funds should only be use for credit cards transactions.

The cash limit on a credit card is usually notify to the cardholder by the bank at the time the card is issue.

The cash limit may not be the same across all of the bank’s credit card types. Which differs from card to card or from client to customer. The cash limit on a certain card is not set and can be change at any moment at the bank’s discretion.

Banks may modify the restrictions on a regular basis or based on other characteristics. Such as cardholder purchasing trends, repayment behaviour, default payments, and additional credit information accessible from credit agencies. Any such changes will be inform to clients via SMS or e-mails.

Credit Card Cash Withdrawals Charges

Credit card cash withdrawals charges apply to credit card cash advances as well. The interest rate is calculate on a monthly basis and is charge from the date of the transaction until the payback is complete in full. Banks normally impose a monthly interest rate of 2.5% to 3.5% on all cash advances.

The rate of credit card charges varies from bank to bank and from card version to card variant, and the cardholder will be inform of the rate at the time of card issuance. Furthermore, the rates are dynamic and subject to alteration at the bank’s discretion. Aside from the external variables that affect the total interest rate on cash advances. Such as card usage, frequency of expenditures, repayment behaviour, and so on, card-specific elements influence the interest rates charged on a particular credit card.

How To Get Cash Using A Credit Card

Using a credit card to withdraw cash from an ATM is the same as using a debit card to get cash. Simply walk into your local ATM kiosks with your credit card and follow the cash withdrawal instructions. Credit card cash withdrawals are possible at ATMs of any bank, regardless of the bank that issued the credit card. However, some banks may charge a cash advance fee if you withdraw money from another bank’s ATM. Some banks may also place restrictions on the amount of cash that may be withdrawn per ATM transaction or per day.

As a result, before using the cash advance service, you should be aware of the terms and restrictions. That apply to your card and the related fees and charges. Knowing the cash available on the card before withdrawing cash is vital to avoid exceeding the limit. If the over-limit transaction is complete, the bank will levy an over-limit fee in addition to the financing costs.

The Benefits And Drawbacks Of Credit Card Cash Withdrawal

Pros 

  • There is no need for documentation or approval.
  • Provides immediate cash because ATMs are available 24 hours a day, seven days a week.
  • Access to limit flexibility

Cons

  • Interest will be levied from the transaction date until the payment is complete in full. 
  • Cash advances are not eligible for credit card reward points.

Conclusion

If you accept a cash advance on your credit cards, all future transactions will be ineligible for the interest-free period until the withdrawn amount is pay in full. This implies that all new purchases will be subject to financing costs from the start. Most card companies do not consider cash withdrawals against the yearly or joining fee waiver spend threshold.

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