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Tata Capital > Blog > Generic > Credit Card Withdrawal: Things To Know


Credit Card Withdrawal: Things To Know

Credit Card Withdrawal: Things To Know

Credit cards have become an essential financial tool for individuals and businesses in India. They offer convenience, security, and a plethora of rewards and benefits. While credit cards are primarily used for making purchases, they also provide an option for cash withdrawals. Continue reading to learn how to get cash from a credit card.

Well, the concept is somewhat different from debit cards in the sense that while debit cards allow cash withdrawals from your existing balance in your bank account, credit cards allow cash withdrawals in the form of a temporary financing facility. You can withdraw cash from normal ATMs using your credit card. Credit card cash withdrawal can be a useful feature in certain situations, but it comes with various considerations that users should be aware of to avoid potential pitfalls.

Let’s explore the factors to consider and when it is appropriate to withdraw cash from a credit card in India.

When Should You Withdraw Cash From a Credit Card?

While we understood how to withdraw money from a credit card, let’s check what are the situations in which it can be of immense help. Following are the different cases where cash withdrawal from credit cards can be useful:

  • Emergency Situations: Emergencies can arise anytime. In such situations, finances often go for a toss. Credit card cash withdrawal can be a lifesaver during emergencies when you need immediate funds and do not have access to other sources of cash.
  • Lack of Other Payment Options: Many people carry credit cards for shopping and spending. However, there might be instances where vendors or service providers do not accept card payments. In such situations, cash withdrawal from a credit card may be the only viable option available.
  • Foreign Travel: In case you are on a foreign trip, then the sources of funds may become limited. In such a case, you may be prompted to withdraw cash from your credit card.

Factors to Consider for Withdrawing Cash From a Credit Card

While credit card cash withdrawal is a useful facility, it comes with associated costs. Here are some of the factors you should consider while using this facility:

1. Charges

Credit card cash withdrawals are often associated with certain charges, which can vary from one credit card issuer to another. It is crucial to understand these charges to make an informed decision. Following are some of the charges for cash withdrawal using a credit card:

  • Cash Advance Fees: Credit card companies typically impose a cash advance fee, which is a percentage of the amount withdrawn or a fixed sum, whichever is higher. This fee is usually higher than regular transaction fees for purchases. It is levied every time you withdraw cash using credit cards.
  • Finance Charges: Unlike regular credit card transactions that have a grace period, cash withdrawals start accruing finance charges in the form of interest immediately from the date of withdrawal until the amount is repaid in full. Thus, you will need to pay the interest from the date of cash withdrawal till the date of repayment. Further, cash withdrawals from credit cards usually attract a higher interest rate compared to purchases. This higher interest rate can lead to increased debt if the withdrawal amount is not paid back promptly.
  • ATM Fees: In addition to the cash advance fee charged by the credit card issuer, additional fees in the form of ATM fees may be levied for using the ATM for cash withdrawal. Depending upon the card issuer, there are no ATM fees till a certain number of transactions beyond which the fees will become applicable.
  • Late Payment Fees: If the minimum amount due on the credit card statement is not paid on time, late payment fees and penalties will be applicable. This can add to the financial burden if cash withdrawals are not managed responsibly. Further, it will also significantly affect your credit score.

2. Credit Score

Frequent or large cash withdrawals from credit cards can negatively impact your credit score as it may signal financial distress or increased credit risk to potential lenders. Also, as stated earlier, late payments may also affect your credit score. Thus, you should always be careful while using the credit card cash withdrawal feature.

3. Reward Points

Generally, credit card issuers do not offer reward points on cash withdrawals. So, you miss out on potential rewards when using this feature. However, some issuers may allow reward points on cash withdrawals as well. Further, some credit cards may offer limited-time promotions or special rewards for cash withdrawals. However, you should thoroughly analyse these offers as these can be against the associated fees and interest charges.

4. Ease of Use

Unlike other options, the credit card cash withdrawal facility can be used anytime and is easy to avail of. It does not involve tedious and annoying paperwork.

In a Nutshell

Knowing how to withdraw cash from a credit card can be a helpful feature in certain circumstances, especially during emergencies or when other payment options are not available. However, it comes with various financial implications that users must consider.

Before resorting to credit card cash withdrawal, it is essential to evaluate the urgency of the situation, assess other available payment methods, and weigh the costs and benefits. Using this feature sparingly and paying off the withdrawn amount promptly can help minimise the financial burden and preserve the advantages of having a credit card.

However, if you select the right issuer, then the associated drawbacks of using the credit card cash withdrawal facility can be minimised to a great extent. TATA Capital credit cards allow you to seamlessly make the credit card application and enjoy various perks. These include cashback, attractive offers, reward points etc. Further, you can avail of a cash withdrawal facility through Easy Money or an ATM cash facility. Another significant benefit is that it allows you to encash up to or above your credit limit. Are you using a TATA credit card?

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