Credit cards have revolutionised the way people look at availing loan or any other credit line in India. Of the many features available on a credit card, the cash advance feature is the one which provides instant liquid cash to the cardholders. Unlike other loans, the credit card cash advance facility does not require any other approvals from the bank nor requires any other documentation. It’s instant and can be withdrawn from any bank ATM located in and outside India. However, the cash advance feature comes with certain terms and conditions, which every credit card holder should know before availing the facility.
Mentioned below is a detailed guide about the credit card cash withdrawal feature along with the associated fee, charges and other details.
Credit card cash advance is the technical term for credit card cash withdrawal facility. It allows credit cardholders to withdraw cash using their credit cards at the bank’s ATM. As credit cards are typically used for card transactions, the cash withdrawal facility is an additional feature offered by the banks. Using the facility cardholders can withdraw cash within permissible limits and shall repay the same along with interest and other charges.
The feature may not be available on all the credit cards and the permissible limits for cash withdrawal may also vary from card to card along with the finance charges. Hence, all the credit card users need to be aware of all such things applicable on their card.
You can either check the terms and conditions of your card or call the bank’s customer care to know the details about your credit card cash advance facility.
While credit limit is the maximum amount that can be spent on a particular credit card, cash limit is the maximum cash one can withdraw using a credit card. Cash limit is typically included in the credit limit available on a credit card. Most banks offer 20% - 40% of the total credit limit as cash limit. For instance, if the total credit limit on a card is Rs. 1 lakh, you can withdraw up to Rs.20,000 to Rs.40,000 as cash using the card. The rest should be spent for card transactions only.
The cash limit on a credit card are typically communicated by the bank to the cardholder at the time of card issuance.
The cash limit may not be same across all the credit card variants offered by the bank hence varies from card to card or from customer to customer. The cash limit on a particular card is not fixed and is subject to change at any point of time at the discretion of bank.
The banks may revise the limits periodically or by considering various parameters including spending patterns on the card, repayment behaviour of the cardholder, default payments and other credit information available from credit bureaus. Any such revisions will be communicated to the customers through messages or e-mails.
Credit card cash advance fee is a fee charged on every cash withdrawal transaction made using a credit card. Every time a credit card is used to withdraw cash, a cash advance fee, which typically is the percentage of the withdrawn amount, will be charged.
Typically banks charge 2.5% to 3% of the withdrawn amount subject to a minimum amount of Rs.300 to Rs.500 as credit card cash advance fee. The fee will reflect in the coming month’s billing statement. Cash advance fee also attracts a finance charge at a rate similar to that charged on the withdrawn amount. It will be levied from the date of withdrawal till the amount is paid back in full.
Even when you conduct multiple cash advance transactions on a given day, you will be charged for every transaction based on the withdrawal amount.
|Credit Card||Credit Card Cash Advance Fee|
|HDFC Credit Card||2.5% of withdrawn amount, subject to a minimum of Rs.500|
|ICICI Credit Card||2.5% of withdrawn amount subject to a minimum of Rs.300|
|Axis Bank Credit Card||2.5% of withdrawn amount, subject to a minimum of Rs.250|
|SBI Credit Card||2.5% of withdrawn amount subject to a minimum of Rs.300|
|Citibank Credit Card||2.5% of withdrawn amount, subject to a minimum of Rs.500|
Just like the regular credit card transactions, cash advances on credit cards also attract finance charges. The rate at which the interest is charged is at the monthly percentage rate and will be levied from the date of transaction till the repayment is made in full. Banks typically charge a rate of interest of 2.5% to 3.5% per month on all cash advances.
The rate varies from one bank to another and from one card variant to other and the same will be communicated to the cardholder at the time of card issuance. Further, the rates are dynamic and are subject to change at the discretion of bank. Besides the external factors that the affect the overall interest rate on cash advances, usage of the card, frequency of spends, repayment behaviour, etc., are other card specific factors that impact the interest rates charged on a particular credit card.
|Bank Name||Interest rate on credit card cash advance|
|Monthly rate||Annual rate|
|HDFC Credit Card||1.99% - 3.5%||23.88% - 42%|
|ICICI Credit Card||2.49% - 3.5%||29.88% - 42%|
|Axis Bank Credit Card||2.95% - 3.5%||35.4% - 42%|
|SBI Credit Card||Upto 3.35%||Up to 40.2%|
|Citibank Credit Card||3.1% - 3.5%||37.2% - 42%|
Withdrawing cash using a credit card is as simple as withdrawing cash using a debit card from an ATM. You just need to walk-in to any of your closest ATM kiosks to with your credit card and follow the instructions for cash withdrawal to get the money. Credit card cash withdrawals can be done at ATMs of any bank irrespective of the credit card issuing bank. However, a few banks may charge a different cash advance fee for withdrawing cash using other bank ATMs. A few banks may also put a cap on the minimum and the maximum cash that can be withdrawn per ATM transaction or per day.
Hence, you need to know the terms and conditions applicable for your card along with the associated fees and charges before availing the cash advance facility. Also, it is important to know the available cash limit on the card before withdrawing the cash to prevent using over the limit. If the overlimit transaction is processed, the bank will also charge an overlimit fee along with the finance charges.
Cash advances on credit card will not be reported separately to the credit agencies. The entire outstanding due and the non-payment of the same will be reported as a whole. Hence, taking cash advance on your credit card may not impact your credit score. However, due to the high interest rates (accrued on a daily basis) and additionals fees and charges levied on credit card cash withdrawal, it may sometimes become difficult for you to keep up with the monthly payments.
When you fail to pay even the minimum amount due, it will affect your credit score and will reflect badly in the credit report. As long as the you make timely payments there will be no effect on your credit score due to cash advance.
The cash advance feature has both pros and cons just like any other feature. However, when used properly it acts as an emergency fund and saves you in times of cash crunch. Let’s look at the benefits and drawbacks of the feature in detail.
Not all the credit cards are eligible for cash advance feature. Providing the facility is completely at bank’s discretion. You need to check with your bank to know whether or not your credit card has that feature.
The cash limit on you credit card will be provided in your credit card welcome kit or in your credit card terms and conditions. You can also check your credit card net banking account to know your total cash limit and available cash limit. Alternatively, you can also call your bank’s customer service helpline to get the details.
Yes, you can withdraw cash at any bank ATM. However, the cash advance fee may vary from one bank’s ATM to another bank.
The interest on credit card cash advances is similar to the interest on card transactions and will levied at a monthly percentage rate calculated on revolving credit basis. However, unlike card transactions there is no interest free period for cash advances and the interest will be charged from date of transaction till the payment is made in full.
If the outstanding due on your credit card contains only cash advance, any payment made towards your credit card will be considered for cash advance. In case, the outstanding due contains other spends such as card transactions, EMIs, balance transfers and others, the payment received will be adjusted in a sequential order beginning with minimum amount due, which includes EMIs on loans, all applicable taxes, 5% of total outstanding; fees and other charges, interest charges, outstanding related to balance transfer, purchases and finally cash advance. Hence, in order to make payment towards cash advance, you need to clear all your dues.