Withdrawing cash on a Credit Card? Here are the dos and don'ts!

Synopsis

• Cash withdrawal using Credit Cards can attract interest.
• Cash advance fees and finance charges will be applicable.
• You will typically not earn rewards on Credit Card cash withdrawals.
  
  

At the end of the month, a Credit Card cash advance may be your best bet for some extra cash. One of the best parts is instant funds without the hassle of submitting documentation and waiting for approval from the bank. The amount you can withdraw depends on the cash limit assigned by the card issuer which is a percentage of the card’s total credit limit. You may also want to consider where you’re withdrawing cash as the charges can vary across bank ATMs. Also, you may typically withdraw a certain specific amount in a day. It’s best to get this information from the card issuer beforehand. Usually, these limits will be communicated to you at the time of card delivery and in the monthly statements.

Things to Consider When Withdrawing Cash Using Credit Cards

Cash withdrawal feature comes with specific terms and conditions that one must be aware of. Here’s a list of factors to consider when withdrawing cash through Credit Cards.

1. Charges 

While it is understood that Credit Cards come with interest and fees, withdrawing cash on Credit Cards can prove to be a costly deal. Here are the charges these loans attract:

• Cash advance fee: This is the fee charged every time you withdraw cash using your Credit Card. Typically, it ranges from 2.5% to 3% of the transaction amount, subject to a minimum amount of ₹250 to ₹500 and is reflected in the billing statement.

• Finance charges: Regular Credit Card transactions attract finance charges and so do cash withdrawals. The charge is levied from the date of the transaction up until the repayment has been done.

2. Interest 

Interest is charged on a monthly percentage rate, typically from 2.5% to 3.5% per month. HDFC Bank Credit Cards offer one of the lowest monthly and annual interest rates, ranging from 1.99% to 3.5% and 23.88% to 42% respectively. Unlike regular transactions, for cash withdrawals, there’s no interest-free period; charges start accruing from the day of the transaction till it’s paid in full. Therefore, it is crucial that you repay the cash advance amount at the earliest.

3. ATM fee 

As a Credit Card user, you are allowed up to 5 free ATM transactions per month, depending on the location. Beyond this limit, you are charged what’s known as an ATM maintenance or interchange fee. Until recently, the fee was ₹15 per cash withdrawal. However, starting 1^st August, the RBI has revised it to ₹17 per withdrawal. In case of non-cash transactions, the fee has been raised from ₹5 to ₹6. Both amounts are exclusive of taxes. The fee will be charged to your Credit Card and appear on your Credit Card statement.

4. Late payment fee 

If you do not repay the full amount, late payment charges are levied on the outstanding balance and this could be anywhere from 15% to 30%. Be aware of the charges levied by your bank and consider whether they are worth paying. Late payment fees can impact your credit scores.

5. Cash withdrawal limit 

Typically, you can withdraw a certain specific percentage of your credit limit as cash. For instance, at HDFC Bank, you can withdraw 40% of the credit limit as a cash advance.

6. Credit score

Taking a cash advance may not impact your credit score, but the high charges associated with cash withdrawals drive up monthly payments. Failure to pay the minimum due amount can affect your credit score adversely. Be sure to make your payments on time!

7. Reward Points 

Most banks offer rewards to Credit Card holders. This can be in the form of discounts, gifts, or other deals. Banks create specific programmes that incentivise cardholders to use Credit Cards for dining, travelling, shopping, etc. You can rack up Reward Points through other payments, which can be redeemed for gift vouchers, cash gifts, air miles, etc. However, when you use your Credit Card to withdraw cash, you may not receive any Reward Points. You may convert your reward points or cashback into statement credit and reduce your overall Credit Card bill.

Cash Advance with HDFC Bank

A Credit Card cash advance can be availed at any time of your choosing. Furthermore, there’s no paperwork involved; you can get the cash instantly. Let’s assume you’re faced with a short-term financial crisis and are in urgent need of cash. If taking a loan or asking for money from your loved ones is not a viable option, advance cash can help you tide over the situation. You can withdraw cash from your Credit Card, although at an additional cost.

Thanks to the numerous features you get with HDFC Bank Credit Cards, you can save money as well as avail of various benefits when you use your card.

FAQs

What are Credit Card ATM withdrawal charges?

Credit Card ATM withdrawals attract a cash advance fee, typically a certain specific percentage of the withdrawn amount, along with interest from the transaction date.

How to withdraw cash from Credit Card without charges? 

It is generally not possible to withdraw cash from a Credit Card without incurring charges.

What is a cash advance fee? 

A cash advance fee is a charge imposed by banks when you withdraw cash from your Credit Card, usually a percentage of the amount withdrawn or a fixed minimum fee.

To apply for HDFC Bank Credit Card, click here.

Read more on what you can use your Credit Card for.

Apply for credit card and enjoy special privileges and cashback offers with HDFC Bank

*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Credit Card approvals at the sole discretion of HDFC Bank Limited. Credit Card approvals is subject to documentation and verification as per Bank's requirement. Interest rates are subject to change. Please check with your RM or closest bank branch for current interest rates.