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How to Withdraw Money from a Credit Card?

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Created on
April 10, 2023

Summary

What’s Inside

Sometimes, you may need emergency cash for offline transactions. You can use a credit card like a standard debit card to get cash out from an ATM. But, you must be ready to bear the associated cash advance fees to withdraw money. Although this feature may not be available for all credit cards.

How To Withdraw Money Using a Credit Card?

Withdrawing money using your credit card is straightforward. First, decide the amount you wish to withdraw and check if the linked account has sufficient funds. Then, find the nearest bank ATM.

  • Insert the credit card into the ATM
  • Enter the credit card PIN
  • Choose the cash advance or cash withdrawal option
  • Select the required cash amount
  • Acknowledge the option to pay associated fees
  • Complete the transaction by collecting the cash

ATM Fees

You are allowed around 5 ATM transactions using your credit card. You’ll have to pay ATM transaction fees if you opt for more transactions. It is also called ATM maintenance fees that may differ according to the ATM and bank.

Later, when you receive the credit card statement, you will see the ATM fee mentioned there. So, it is better to stick to your bank account ATM while withdrawing cash. It will help you reduce the amount of ATM maintenance fees if you make multiple transactions.

What is a Credit Card Cash Advance Fee?

The Credit Card Cash Advance Fee is a charge imposed every time you withdraw cash using a credit card. Typically, this fee is calculated as a percentage of the amount withdrawn, usually 2.5% to 3.5% with a minimum threshold of ₹300 to ₹500, depending on the bank. The fee will be included in the following month's billing statement. Additionally, the cash advance fee incurs a finance charge at a similar interest rate to that imposed on the withdrawn amount. This charge applies from the withdrawal date until the entire amount is fully repaid. Each cash advance transaction performed in a single day attracts a separate fee based on the amount withdrawn.

Does Credit Card Cash Withdrawal Affect Credit Score?

While obtaining a cash advance might not directly influence your credit score, the significant fees involved with cash withdrawals can increase your monthly payment obligations. Failing to pay at least the minimum required amount could have a negative impact on your credit score. It's crucial to ensure timely payment to avoid any adverse effects on your credit.

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Conclusion

You can use your credit card to withdraw cash anywhere in the country. When using a credit card for cash withdrawals, it's important to be aware of the associated fees and transaction limits. While cash advances may not directly impact your credit score, the high charges involved can lead to increased monthly payment obligations. Failing to make timely payments, including at least the minimum required amount, could have adverse effects on your credit score. Therefore, it's essential to manage your payments responsibly to avoid any negative consequences.

Frequently Asked Questions

1. How to withdraw money from a credit card without charges?

It's not possible to avoid withdrawal charges while using a credit card. However, you can explore if any financial institution offers credit cards without cash advance fees or costs.

2. Can you transfer money from a credit card to a bank account?

Yes, you can transfer money from your credit card to your bank account using an ATM, net banking, cheque issuing, and calling the bank. But the daily transfer limit of funds can often vary from one bank to another.

3. How do I avoid cash advance fees?

Here are a few options to avoid cash advance fees:

  • Personal loans: consider if the fees and interest rates are lower.
  • Friendly borrowing: borrow money from a friend or family member.
  • Paycheck advance : these can send your paycheck early.
  • Peer-to-peer (P2P) loans: consider if the fees and interest rates are lower than those of a cash advance.
  • Budgeting: so you can build an emergency fund. Even setting aside a small amount of cash each paycheck can help.Note that payday loans aren't typically recommended because of their high fees and interest rates.

4. Is cash advance fee good or bad?

No, cash advance fees are not a good idea. Although cash advances can give you quick access to cash, they can be very expensive due to high fees and interest rates.

Disclaimer

Fi Money is not a bank; it offers banking services through licensed partners and investment services through epiFi Wealth Pvt. Ltd. and its partners. This post is for information only and is not professional financial advice.
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