How are credit card cash advance fees calculated?

Meta Description: Gone are the days when credit cards only use to pay for expenses. Today they double as instant loan providers by allowing users to get instant cash without the hassle of paperwork. However, they do come with a few ifs and buts that one must look out for before taking the plunge. Here’s everything you need to know on the subject.

Keywords: Credit Card Cash Advance Fee, best credit cards in India

Anyone with a credit card always wants to make the most of its benefits, and rightly so. As many of us know, credit cards come with the added benefit of providing users with liquid cash. Whenever necessary through the credit card cash withdrawal facility. Sounds like a win-win situation, right? But there is a catch, whenever withdrawing money through a credit card. One has to pay what is known as the credit card cash advance fee. But what is this fee? And more importantly, how much is it? And does that imply that withdrawing money through credit cards is really not a great financial decision to make? Before you rush to ill-informed conclusions, we suggest you go through this quick guide to decide for yourself.

What does Credit Card Cash Withdrawal mean?

As the name suggests, credit card cash withdrawal is a facility that allows credit cardholders to withdraw cash from the ATMs of the respective banks that have issued their credit cards. This option comes in a hassle-free and convenient way. As opposed to loans that require a lot of paperwork for approval. The cash obtained through this method considers borrowing from the bank, just like all other expenses made through a credit card. Needs to be paid back to the bank at the end of a certain billing period. This facility is not available on all cards, and even then the payable charges and interest rates vary from bank to bank. With these basic facts in place, here are a few frequently ask questions about Credit Card Cash Withdrawal.

How much cash can I withdraw through this system?

There is a limit to how much cash one can withdraw through this system known as the Credit Card Cash Advance Limit, but it varies from person to person. As we know, all credit card users have a fixed credit limit allotted to them by the bank. Which is the amount of money that can be spent through the card, and it depends on their respective credit scores and other factors. The advance cash limit is much less than the total credit limit, mostly 20-40%.

What are the charges and interests one has to pay to withdraw cash?

There are two primary charges that one needs to pay in order to avail of this service. The Credit Card Cash Advance Fee and the finance charge.

  • Credit card Cash Advance Fee: This is a one-time fee that needs to be paid for every withdrawal. He an account for in the monthly bill. The fee charged by some of the best credit cards in India is mostly 2.5 to 3% of the withdrawn amount. For example, HDFC credit cards levy a charge of 2.5% of the withdrawn amount with a minimum of INR 500. For ICICI and Axis Bank cards, the percentage remains the same, with the lower limit being INR 300 and 250 respectively.
  • Finance Charge: This entails an interest rate that is Levi on each withdrawn amount from the date of withdrawal, and needs to be paid along with the borrower’s money. Most banks charge interest in the range of 2.5 – 3.5% per month. However, this is subject to change depending on external factors as well as the customer’s track record. HDFC bank has one of the lowest interest rates, from 1.99-3.5%, while the likes of ICICI and Axis Bank charge 2.49-3.5% and 2.99-3.5% respectively.

The much-vaunted and sought-after Bajaj Finserv RBL Bank SuperCard not just allows you to withdraw interest-free cash for up to 50 days. But also gives you a quick personal loan during financial emergencies. The interest rate is nominal, and so is the processing fee.