Having funds handy is a basic necessity in today’s fast-paced lifestyle. The phases of the Covid-19 pandemic have further shown the importance of keeping emergency funds ready to deal with any unforeseen events.  Making use of your savings is not a prudent idea as it would cause a huge dent in your savings. Short-term loans like credit card cash withdrawal or instant personal loans are a better option as they provide borrowers with the option of quick funds.

Credit cards are being increasingly used by people in India. There are many features available on a credit card, of which the cash withdrawal feature provides instant cash to the cardholder.

What is a Credit Card Cash Withdrawal?

Credit card cash withdrawal or cash advance refers to withdrawing cash through credit cards. Through this facility, credit cardholders can withdraw cash via their credit cards from the bank’s ATM. The credit card cash withdrawal facility is a value-added benefit, though this feature is not available on all credit cards. It is a feasible option because like other loans, the credit card cash withdrawal facility does not require approvals from the bank nor any need for documentation. The amount of credit card cash advance is dependent on the cash limit designated to a specific credit card, which is a percentage of the card’s total sanctioned credit limit.

A cardholder gets thus to withdraw cash within the permissible limit, which needs to be repaid with interest and other applicable charges. The charges may differ between credit cards, as such the credit card users need to be aware of all such repayments before availing of credit card cash withdrawal.

What are the charges applicable on Credit Card Cash Withdrawal?

Various charges are applicable on credit cards. The charges that these loans attract are:

Cash Withdrawal Fee: This fee gets charged for every cash withdrawal done via your credit card. Typically, this fee could be between 2.5% to 3% of the withdrawal, subject to a minimum charge of Rs.250 – Rs.500. The fee thus charged gets reflected in the card holder’s billing statement.

Finance Charges: Any normal credit card transaction entails financial charges, likewise for cash withdrawals. These charges are levied from the transaction date till the cash withdrawal loan has been repaid.

Interest Charges: Interest on credit cards gets charged via a monthly percentage rate, normally between 2.5% to 3.5%.  Unlike a regular transaction, credit card cash withdrawals have no interest-free period. So, the interest charges are applicable from the transaction date till full repayment of the credit card cash withdrawal amount.

ATM Fee

For every ATM transaction above the permissible limit of ATM transactions in a month, a credit card user gets charged an ATM maintenance or interchange fee. This fee gets charged on your credit card and will appear in your Credit Card statement.

Late Payment Charges

Late payment fees get levied if you do not repay the full amount of credit card cash withdrawal.  Late payment charges get charged on the outstanding balance, and range between 15% - 30%  

Though credit card cash withdrawal is a viable short-term loan option, still the credit card holder should be aware of the various charges levied, and whether it is worth going for.