Credit card cash withdrawal, also known as credit card cash advance, is a facility that allows credit cardholders to withdraw money at the ATM using their credit cards.
The credit cardholders can withdraw cash up to a certain limit, and this amount has to be repaid along with interest and other charges.
How Does Cash Withdrawal From Regular Credit Card Work?
Using your credit card to withdraw cash during a financial crisis is a tempting option, but one that can eventually increase your financial burden.
When you use your credit card to make a purchase, you are billed on the next billing date. Depending on your date of purchase, banks normally give an interest-free period of 15 to 45 days, 20 to 50 days etc., depending on their policies. But this is not the case with cash withdrawal on credit cards. Whenever you withdraw cash from credit card a cycle different from a credit card purchase cycle kicks in.
No Free Credit Period for Cash Withdrawal
There is no free credit period. The interest starts getting calculated from day one itself. Cash withdrawal on a credit card also incurs a transaction fee and a finance charge. These vary between banks but can be as much as 2.5% to 3% of the amount withdrawn or a minimum amount, set at the discretion of the bank. Customers pay the higher of the two amounts. The finance charge or interest on cash withdrawal from a credit card is also high when compared to credit card purchases.
Can We Withdraw Money From Credit Card From ATM?
The answer is yes. Banks charge customers each time they withdraw money using their credit cards from the ATM. These charges are less if the bank ATMs are used, and very high when ATMs of other banks are used to withdraw the cash.
What Is Credit Card Cash Advance Limit and How Is It Different From Credit Limit?
While credit limit is the maximum amount you can spend on a credit card, the cash limit is the maximum cash you can withdraw using your credit card.
The cash limit component is usually included in the credit limit and is communicated to you when the credit card is issued. Most credit card lenders offer 20% to 40% of the total credit limit as cash limit. This means if you have a credit limit of ₹ 1 Lakh on your credit card, you can withdraw cash up to ₹ 20,000 to ₹ 40,000 using the card. The rest has to be spent as regular card transactions.
The cash limit varies from bank to bank and from customer to customer. The banks can decrease or increase your cash limit depending on your spending pattern, repayment behaviour, and other credit information obtained from credit bureaus. If there is a revision, the bank will communicate it to you through an email or message.
MoneyTap Credit Card 2.0 is different from a traditional credit card. While traditional credit cards have cash limits, ranging from 20 to 40%, MoneyTap offers 100% cash limit on its credit card.
What Is the Interest on Cash Withdrawal From a Credit Card?
Unlike a retail purchase, where you get to enjoy an interest-free period ranging from 20 to 50 days, cash withdrawals attract interest rate from the first day itself. Cash advance accrues interest at the rate of 2.5%-3.5% per month. You are also charged a transaction fee, which is typically at about 2%-3% of the transaction amount. That’s not all. Taxes are also charged over the interest, and that makes cash withdrawals using your credit card a very costly affair.
Here’s a list of charges that are associated with credit card cash withdrawal:
Cash advances using credit cards do not have an interest-free period. Typically, the interest charged on cash withdrawals ranges from 2.5% to 3.5% per month.
- Cash advance fee
Every time you make a cash withdrawal using a credit card, a cash advance fee is charged, which is typically in the range of 2.5% to 3% of the transaction amount.
- Finance charges
Like any other credit card transactions, cash withdrawals also attract finance charges. Charges are applied from day one until the amount is paid in full.
- Late payment fee
If you fail to pay the full amount, late payment charges are applied on the outstanding balance, which range from 15% to 30%.
How to Withdraw 100% of Your Credit Limit Without Fee?
So how can you meet the requirements of cash in a financial emergency while avoiding paying these hefty fees? You can do this by getting a line of credit/credit card from MoneyTap.
MoneyTap approves a line of credit for your personal use and lets you access this credit via its app and also through the MoneyTap credit card.
While the MoneyTap credit card works like any other credit card with reward points and benefits, you can use the MoneyTap app to transfer a part or all of your approved limit into your own bank account. This transfer is instant and can be done with a few taps on the app.
This money is then available for cash withdrawal or any other transactions you may wish to do. This unique MoneyTap feature that lets you transfer the entire credit limit into your bank account makes it possible to withdraw 100% of your credit limit. You will not get this feature on any other regular credit card. With MoneyTap’s personal line of credit, you get all the features of a credit card plus more! You can use your money as you like and as much as you need.
A credit card is an excellent financial tool if you get the knack of using it wisely and responsibly. Using credit cards like cash tools is not advisable. However, MoneyTap can be listed down as an exception. Here’s why: MoneyTap allows you to withdraw 100% of your credit limit at a low-interest rate. Although you can withdraw 100% of your credit limit, the interest will be charged only on the amount you withdraw, and not on the entire credit limit. You also have an option to repay the amount in flexible EMIs over a repayment tenure you choose according to your financial capability. Become an educated consumer and use MoneyTap Credit Card for cash withdrawals and save money.