Credit cards come with a variety of benefits like cashback, reward points, and discounts to provide customers with convenience and financial freedom while making purchases.
However, if you need cash, it is not advisable to use your credit card for cash withdrawal due to high fees and interest rates associated with cash advances.
Charges Involved in Withdraw Cash Using Credit Card
When you withdraw the cash using your credit card, you will be charged certain fees for the transaction. These charges are:
#1. Cash Advance Fees
Most credit card issuers charge a cash advance fee, which is generally 2.5% to 3% of the amount withdrawn or a fixed amount (usually Rs. 500), whichever is higher.
This fee is applicable every time you withdraw cash using a credit card. However, there are some credit cards that do not charge any cash advance fees. You can also avoid the 5 transactions with your credit card.
#2. High-Interest Rates
When you use your credit card for regular purchases, you can enjoy an interest-free period of up to 50 days. However, cash advances do not have this privilege and start accruing interest immediately.
Additionally, the interest rate for cash advances is the same as that for regular purchases, ranging from 3% to 4%.
#3. ATM Fees
When you withdraw cash from an ATM using your credit card, you may also be charged an additional ATM fee by the ATM operator. These fees can vary depending on the ATM operator and your credit card issuer.
Let’s explore different ways to get cash from credit cards without incurring charges.
Withdraw Cash From Credit Card Without Charges
Generally, the cash advance fee cannot be avoided when you withdraw cash using a credit card. However, there are alternative ways to withdraw cash using your credit card while incurring low or no charges.
Here are some of the best options available:
#1. Apply a Credit Card with Zero Cash Advance Fees
You can apply for a credit card that offers zero cash advance fees. These credit cards belong to the premium category and offer exceptional benefits, accompanied by high annual fees.
Due to the stringent eligibility criteria, not everyone is eligible to obtain approval for such credit cards.
For example, the Axis Bank Reserve Credit Card has no cash advance fee. You can withdraw cash without paying the cash advance charges. However, it is still advisable to consider the interest rate involved.
#2. Avoid Interest Charges by Paying Your Credit Card Bill Soon
When using your credit card to withdraw cash, it is not possible to avoid the cash advance fee; however, interest charges can be avoided by paying your credit card bill payment as soon as possible.
Unlike other purchases that generally offer an interest-free period, cash advances begin accruing interest the day after the transaction. Therefore, to prevent incurring additional charges, it is essential to make timely payments on your credit card bill.
#3. Use Alternate Methods Instead of Direct Cash Withdrawals
In case of an emergency where you require cash withdrawal using your credit card, you may prefer to use alternative methods to minimize charges.
You can load your mobile wallet like Paytm using the credit card and then transfer the same amount to your bank account. But you need to pay the wallet loading charges which are generally 1% -2% lower than cash advance fees.
You can not withdraw the cash from your credit card without any charges, but you can use various methods to minimize this additional cost.
However, it is not a good idea to withdraw cash using credit cards unless it is an emergency. The cash advance facility is just for your convenience, but it is advisable to avoid using it as much as possible.