How to withdraw cash from Credit Card? - 5 easy steps

Suppose you need immediate cash to handle an urgent situation in the middle of the night. However, your savings account balance is insufficient, and no one can lend you funds. This is where a Credit Card can help. Many people don't know they can withdraw money through a cash advance facility using their Credit Card. Let’s discuss how to withdraw money from Credit Card while highlighting the pros and cons of a Credit Card cash withdrawal facility.

What is Credit Card cash withdrawal?

Credit Card cash withdrawal, commonly referred to as a cash advance, allows you to withdraw cash from your Credit Card. This feature turns your credit line into a temporary ATM cash facility, providing a quick solution in times when liquid cash is necessary. However, it's important to note that withdrawing cash from your Credit Card differs from using a Debit Card, and comes with specific conditions and charges.

Steps withdraw cash using Credit Card

1. To withdraw cash from your Credit Card, find an ATM that accepts your card network (Visa, MasterCard, etc.).

2. Insert your Credit Card into the ATM and enter your PIN.

3. Choose the 'Credit Card' option (if prompted) and then select 'Cash Withdrawal' or a similar option.

4. Input how much cash you want to withdraw, considering your card's cash limit.

5. Confirm the transaction and collect your cash and receipt.

This process can slightly vary depending on the ATM or the bank, but the steps are generally similar across all platforms.

Also Read :Credit Cards: Six reasons why you should have a credit card

Impact of Credit Card cash withdrawal on credit score

It is essential to understand how Credit Card cash withdrawals can affect your credit score. When you withdraw cash using your Credit Card, it increases your credit utilisation ratio. Credit bureaus often perceive a high credit utilisation ratio as a red flag, indicating potential financial distress or mismanagement. This perception can result in a dip in your credit score. Not paying back the withdrawn amount promptly can also contribute to this effect.

Cash withdrawal via your Credit Card also accumulates interest at a higher rate than regular Credit Card purchases. This further intensifies your debt and potentially harms your credit score.

It's essential to balance the need for immediate cash against these potential long-term effects on your credit health. Responsible usage, coupled with timely repayments, is key to maintaining a healthy credit score while utilising the cash withdrawal facility on your Credit Card.

Advantages and disadvantages of Credit Card cash withdrawal 

Advantages

Instant access to cash

When you are in a tight spot and need cash immediately, a Credit Card cash withdrawal can be a lifesaver. You don't have to wait for loan approval or bank processes — it is as easy as riding to a nearby ATM.

No usage restrictions

Unlike loans, which are usually meant for specific purposes, cash withdrawn from your Credit Card can be used for anything, giving you flexibility during difficult situations.

Disadvantages

High transaction fees

Every cash withdrawal attracts hefty fees, often around 2-3% of the withdrawn amount. This adds a significant burden to your expenses.

Impact on credit score

Frequent cash withdrawals can suggest financial stress to lenders, ultimately lowering your credit score and affecting your future borrowing ability.

Limits for credit and cash withdrawal using Credit Card

Each Credit Card comes with two limits: a credit limit and a cash limit. The cash limit is typically a percentage of your total credit limit, usually around 25-30%. It will vary from bank to bank. For example, if your Credit Card has a credit limit of ₹1,00,000, your cash limit might range from ₹25,000 to ₹30,000. Knowing these limits is crucial to avoid overstepping and incurring additional charges.

Also Read :6 Credit Card Mistakes to Avoid

Credit Card cash withdrawal charges

Withdrawing cash from your Credit Card incurs various charges, including:

• Cash advance fee: It is usually calculated as a percentage of the amount withdrawn and typically falls between 2.5% and 3%. But the exact fees can vary depending on the issuer and withdrawal circumstances.
• Interest charges: The system applies higher interest rates from the day of cash withdrawal until full repayment.
• ATM charges: The ATM provider might levy additional fees on cash withdrawals.

These charges vary based on the Credit Card provider. Always review the terms and conditions or reach out to your bank for precise details.

Conclusion

Withdrawing money from your Credit Card, while convenient, requires a careful understanding of the associated costs and credit score implications. As you navigate this essential feature, it's also essential to explore the various perks and features offered by your Credit Card provider.

For instance, Axis Bank Credit Cards come with an array of benefits tailored to meet different lifestyles and needs. From reward points on everyday purchases to exclusive discounts and offers on dining and travel, these cards are designed to enhance your spending experience.

By staying informed and prudent, you can make the most out of your Credit Card while keeping your financial health in check. Remember, your Credit Card is more than just a payment tool; it's a gateway to a world of possibilities.

FAQs

Can I withdraw cash using my credit card?

Yes, you can withdraw cash using your credit card at the ATM.

What is the process for withdrawing money from my credit card?

• Go to any ATM that is compatible with the variant of your Credit Card i.e. Visa, Master or RuPay
• Insert your Credit Card in the ATM
• Select Cash Withdrawal option
• Key in the amount you need
• Key in your Credit Card PIN and collect the cash
• You will get an alert regarding the withdrawal just like you get an alert when you swipe your card

How much cash can I withdraw using my Credit Card?

The cash withdrawal limit is usually a percentage of the credit limit on your credit limit. This is mentioned in the terms and conditions of your Credit Card. Make sure you read the fine print carefully before using the feature.

What are the fees for Credit Card cash withdrawal?

It is usually 2.5-3% of the amount withdrawn, with a fixed minimum amount.

Is cash withdrawal from Credit Card interest free?

You will be charged an interest for withdrawing cash using your Credit Card, from the day you withdraw the cash. Unlink other Credit Card transactions there is no interest free period for cash withdrawal.

Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.