Did you know? You can also withdraw cash from Credit Card. In this article we will have a look at how much interest is charged on credit card cash withdrawal.
A credit card is mainly used for making purchases, but it also allows you to withdraw cash from ATMs through a facility called a cash advance. This feature can be helpful during emergencies when you need immediate cash. However, unlike normal card purchases, cash withdrawals attract interest and additional charges from the date of withdrawal.
What is a Credit Card Cash Withdrawal?
A credit card cash withdrawal, also known as a cash advance, allows cardholders to withdraw cash from an ATM using their credit card. Since this facility is treated as a loan by the bank, it comes with interest charges and withdrawal fees.
Cash can be withdrawn from ATMs at any time, making it a convenient option when immediate funds are required.
Credit Card Cash Withdrawal Limit
Every credit card has a cash withdrawal limit, also known as the cash advance limit. For example: HDFC Bank generally allows cardholders to withdraw cash up to 40% of their total credit limit. For example, if your credit card limit is ₹1,00,000, you can withdraw up to ₹40,000 as cash. The actual limit depends on the type of credit card you hold.
SBI also does not provide any interest-free period for cash withdrawals. Interest starts from the date of cash withdrawal itself. The finance charge is 3.75% per month (45% per annum) for unsecured credit cards and 2.75% per month (33% per annum) for Shaurya, Defence and Secured Cards. The minimum finance charge is ₹25.
Apart from the interest charges, SBI Card also levies a cash advance fee on every cash withdrawal. For withdrawals made from SBI ATMs or other domestic ATMs, the fee is 2.5% of the transaction amount, subject to a minimum charge of ₹500. The same fee of 2.5% of the transaction amount, with a minimum charge of ₹500, is also applicable for cash withdrawals made from international ATMs.
Interest Rate on Cash Withdrawal
Interest is charged on the cash withdrawn through a credit card. The interest is calculated on a monthly basis and starts from the date of cash withdrawal. It continues until the entire withdrawn amount is fully repaid. For example, in HDFC Bank, the interest rate ranges from 1.99% to 3.49% per month. In case of default, the maximum interest rate can go up to 3.50% per month. These rates may change as per RBI guidelines.
Cash Withdrawal Charges
Apart from interest, every cash withdrawal transaction also attracts a withdrawal fee. For example, HDFC Bank charges 2.5% of the withdrawn amount or ₹500, whichever is higher. This fee is added to the next month’s credit card statement.
For example, if you withdraw ₹40,000, the withdrawal fee will be ₹1,000 (2.5% of ₹40,000). If you withdraw ₹5,000, the fee will still be ₹500, as it is the minimum charge. The bank may revise these charges from time to time.
