Need cash in a pinch? The credit card cash withdrawal facility lets you get cash from a credit card in the form of an advance. You can repay it in easy monthly instalments or the entire amount at once.
Before you jump in, it’s essential to understand the details, including the following:
- Withdrawal Fees
- Processing Fees and/or ATM Charges
- Interest Rates
- How It works
This option can be a lifesaver when you need immediate access to funds. Let’s explore how the process works, its advantages and drawbacks, and whether it’s the right choice for you.
Credit Card Cash Withdrawal – Definition
Credit card cash withdrawal is a feature that allows you to withdraw cash from an ATM by using your credit card. It is similar to how you withdraw money using a debit card. It requires no extra paperwork or approval from the card issuer.
However, not all credit cards offer this feature, and the withdrawal limit and charges can vary depending on the bank. In addition, all credit cardholders may not be eligible for this feature. You may be eligible only if you have a good credit score and have been paying your credit card bills on time.
Cash Withdrawal Charges
Credit card cash withdrawal charges are the fees you pay when taking out cash from an ATM using your credit card. These charges depend on the card issuer and the withdrawal amount.
- These one-time charges are 2.5% to 5% of the withdrawn amount
- Each cash withdrawal incurs a separate fee, adding to the overall cost
Common Credit Card Cash Withdrawal Charges
Keep in mind that cash withdrawal fees are not the only charges you pay for a cash advance. There are other charges that depend on the bank and card type. Here are the common types of fees you must be aware of before taking out money from an ATM through your credit card:
- ATM Usage Fees
- Interest Charges (that start to accrue immediately and may be higher than the interest levied on unpaid balances)
- Foreign Transaction Fees (in case you are withdrawing money from an ATM overseas)
Pros and Cons of Credit Card Cash Withdrawals
You get quick cash from your credit card app, but it attracts high interest and other fees. Below is a detailed comparison of their benefits and drawbacks.
| Pros | Cons |
| Provides immediate cash in urgent situations | Interest starts accruing immediately and is usually higher than that levied on overdue balances |
| Allows for easy access at ATMs anytime, anywhere | ATM fees, withdrawal fees, and other charges add to your costs |
| Doesn’t need prior approval from the credit card company | Frequent withdrawals can result in high debt due to compounding interest |
| Works as a backup when digital payments or debit cards are not an option | The withdrawal limit is usually lower than the total credit limit |
| Requires no to minimal paperwork | Too many cash withdrawals can harm your financial health and credit score |
| Has a much faster processing time than other loans or credit facilities | Cash advance is not available to all cardholders but only to the eligible ones |
Steps to Withdraw Cash Using a Credit Card
The process is simple, similar to using a debit card at an ATM. Follow these general steps to withdraw cash:
- Insert Your Credit Card
Place your card into the ATM slot
- Enter Your PIN
Input your PIN provided by the card issuer
- Select ‘Cash Withdrawal’
Choose the ‘Cash Withdrawal’ option in the ATM menu
- Enter the Amount
Specify the amount you wish to withdraw, but keep your cash advance limit in mind
- Confirm the Transaction
Review the details and proceed with the withdrawal
- Collect Your Cash & Receipt
Take your money and ensure you have your transaction receipt for reference
Factors to Consider While Withdrawing Cash Using a Credit Card
Do not take a cash advance without thinking clearly and deeply. Consider the following aspects:
- High Fees and Interest: Cash withdrawals come with high fees and interest, which starts accruing immediately. Always check the costs before withdrawing and plan your repayment in advance.
- No Rewards or Benefits: Unlike regular card purchases, cash withdrawals do not offer reward points, cashback, or other benefits.
- Impact on Credit Score: Frequent cash withdrawals and late repayments may have a negative effect on your credit score.
- Potential Financial Distress: Regular cash withdrawals may signal financial difficulties, making it harder to get loans in the future.
- No Grace Period: Interest applies from the day of withdrawal, unlike regular transactions that offer a grace period.
How Does Withdrawing Money Affect Your Credit Score?
Credit card cash withdrawals do not directly impact your credit score. However, they can indirectly affect your score due to the following reasons:
- High Interest & Fees
The extra cost makes it harder to repay your dues in full.
- Increased Credit Utilisation
Frequent cash withdrawals can raise your credit utilisation ratio, which may lower your score.
- Late or Partial Payments
Missing payments or paying only the minimum due can negatively impact your credit score.
Credit card cash withdrawals can be a quick fix when you’re short on cash, but they come with high fees, instant interest, and no grace period. If you don’t repay on time, it could affect your credit score too. Choose to convert your cash withdrawal amount into EMI (Equated Monthly Instalments), which helps spread the payment over a few months.
Looking for a credit card without an annual fee that offers an easy way to access funds when you are in need? Consider the One Credit Card. It is a game-changer with no joining, annual or reward redemption charges. It offers the OneCash features, which allows you to borrow funds against your credit limit. Just choose your amount, select your EMIK tenure, and add your bank account details to get a loan against your credit limit!
With this card, you can unlock financial freedom and enjoy rewards with every swipe. Use the OneCard App to find the best offers near you with a GPS tracker and enjoy 5X rewards on your top two spending categories every month. These points never expire, and this card features a fast, seamless digital onboarding process. Apply today to enjoy a hassle-free, rewarding credit card experience.
