Worried about credit card cash withdrawal charges during an emergency? Don’t be. By staying informed about what they are and how you can manage your cash flow with this feature, you can make use of it when needed. 

In emergencies, this facility can help you get the funds you need instantly. While it does come with certain fees, staying in the know can help you plan for them. It involves two main fees: 

• One-time cash advance fees
• Finance or interest charges 

Here is everything to know to make the best use of this credit card feature.

How To Withdraw Cash

Withdrawing cash using a credit card can be as simple as using a debit card. Additional fees may apply if you withdraw cash at an ATM other than your issuer’s. Here are the simple steps you can follow.

• Step 1: Visit an ATM that accepts your card 
• Step 2: Insert the card and enter your PIN
• Step 3: Choose the ‘cash withdrawal’ or ‘cash advance’ option
• Step 4: Choose ‘credit’ between ‘debit’ and ‘credit’ options
• Step 5: Enter the amount you want to withdraw, considering the limits
• Step 6: Acknowledge the transaction 
• Step 7: Collect the cash and receipt

Things to Consider 

Since credit card cash withdrawal doesn’t need any documentation or prior approval, it is convenient. This does not mean you should make it a regular practice. Keep a few things in mind before withdrawing cash with it.

Know the Difference Between Credit Limit and Cash Limit

Your credit card comes with two limits, which are explained below: 

• Credit Limit: The maximum amount you can spend on your card through online transactions, offline payments and cash withdrawals
• Cash Limit: The maximum amount you can withdraw from your credit card

With this information, you can understand that the cash withdrawal limit is a percentage of the credit limit, varying from bank to bank. Also note that you will get this facility only if you are an eligible cardholder as not everyone qualifies for it.  

Fee Structure on Getting Cash Advance 

To avoid any uncertain charges, knowing all the terms and credit card cash withdrawal charges is important. For each transaction, a transaction fee up toto 3.5% of the amount you withdraw applies. Some issuers may even charge a flat fee. Apart from that, be aware of:

• ATM fee:

Every bank allows up to 5 free ATM transactions. Beyond that, the bank charges a certain amount known as ATM maintenance or interchange fee.

• Late payment fee:

A late payment is charged if you do not make the full repayment on time. Ranging between 15%- 30%, the fee is levied on the outstanding balance. 

Interest Charges 

Unlike other transactions, you do not get an interest-free period for this facility. Thus, your withdrawal will start accumulating interest until you pay the complete amount.

The rate varies is applicable from the date of the transaction until you fully repay the amount.  Knowing this is important when getting a credit card r using this facility, as it directly impacts your finances.

In some cases, you may have a short interest-free period up to 50 days where you can repay the sum you withdraw. This depends on the kind of card you have. 

Impact On Credit Score

Opting for cash advances doesn’t directly impact your credit score. This is because it is treated as a regular transaction. However, failing to pay the monthly bill of your card will affect your credit record. There are many reasons you may not be able to make the monthly payments in full:

• High interest rates
• Financial emergency 
• Budget restrictions due to job loss, medical needs, etc

All these factors can result in a negative mark on your credit report if you cannot repay on time. Hence, to maintain a good credit score, timely credit card bill payments are mandatory.

How Much You Can Withdraw

Generally, the cash limit is between 25%-30% of your total credit limit. You can understand this with an example:

• Assume your credit limit is ₹1 lakh
• The cash withdrawal limit will range between ₹25,000 to ₹30,000
• Now, say your credit limit increases to ₹2 lakh
• Then your credit limit will be between ₹50,000 to ₹60,000
• The rest of the limit can be used in card transactions only

Knowing and verifying all these details can help you withdraw cash in an informed way. While it is a great option to meet any emergency financial needs, it comes with many restrictions. If you are looking for instant approval on a credit card with maximum benefits, consider the One Credit Card. 

This lifetime-free card doesn’t have any hidden charges. What’s more, you can get up to 5X reward points on your top two sending categories. Tracking your expenses is easy with the help of One Credit Card’s smooth and sleek mobile app. Apply now to enjoy a better credit experience.