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What is a Credit Card Cash Advance?

Highlights

  • Explore the meaning of the Credit Card Cash advance.
  • Know the benefits of getting the cash advance on your credit card.
  • Go through the Cash Advance Fee of various credit cards offered by different banks.

If you are using a credit card then you must have heard about the term Credit Card Cash Advance. This facility is offered by many banks to their credit card users. In this facility, you can withdraw cash using your credit card from the ATMs. Usually, people use a credit card to make online payments and enjoy great offers on various brands. But when they need a liquid fund then the Credit card Cash Advance is the best solution. You can withdraw cash from the bank’s ATM using your credit card and take that fund as a loan up to a certain percentage of the credit limit. Remember, the interest on the cash advance is charged from the day when the cash is withdrawn and there is no interest-free period for the cash withdrawal.

How Cash Advance in Credit Card Works?

None of the banks give you the full credit limit to be withdrawn as cash from the ATMs. You will always get a certain percentage of the credit limit that can be withdrawn as cash from the ATMs. The percentage of the cash advance depends on the banks and it can be between 20% to 40%. The bank can increase or decrease this percentage anytime depending on the behaviour of the cardholder.

Suppose, your credit card has a credit limit of ₹2 Lacs and the bank gives you the cash advance facility of 20% then you can make a cash withdrawal from the ATMs of a maximum of ₹40000. The cash advance charges will apply to every cash withdrawal you make from your credit card.

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Credit Card Cash Advance Fee

The credit card cash advance fee is usually between 2.5% to 3% of the cash withdrawal subject to a minimum of ₹300 to ₹500 per withdrawal. This fee might vary from bank to bank but it is charged on every credit card for withdrawing cash from it.

Pros and Cons of Cash Advance

There are certain Pros and Cons of withdrawing cash using a credit card and you must explore all of them.

Pros

  • You can withdraw cash anytime as the ATM service is available round the clock. It provides instant cash in a liquid form even if you are in any part of the country.
  • There is no need for any approval or documentation because the bank gives you a certain percentage of the credit limit to be withdrawn as cash.
  • If you are using your credit card efficiently and making payments on time then the bank automatically increases the credit limit; hence your cash advance limit will also increase.

Cons

  • The fees and charges of the cash advance are high and it is charged every time you withdraw cash from the ATM from your credit card.
  • No interest-free period will apply to the cash withdrawal from the credit card because the interest is charged from the date when the cash is withdrawn and until it is paid.
  • You will not earn any reward points when you make use of the cash advance.

Conclusion

So, you are aware of credit card cash advance and you must make use of this facility carefully. This facility has many advantages but on the other hand, it also has many disadvantages. Therefore, you must make use of this facility only in case of an extreme liquid cash emergency. 

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