| Overview: Withdrawing cash using a credit card is convenient but comes with costs and limitations. Understanding fees, interest rates, and limits is essential before relying on it during emergencies. This blog talks about the risks, benefits, and important rules around credit card cash withdrawals to help you make informed financial decisions. |
Think Before You Swipe: Cash Isn’t Always Free
Cash withdrawals via credit cards are on the rise in India, particularly during emergencies. As per Reserve Bank of India (RBI) data, over ₹6,000 crore was withdrawn via credit cards in just one financial quarter of 2024.
While convenient, these withdrawals attract high interest rates, no interest-free period, and extra charges—making them one of the most expensive forms of borrowing.
What is Credit Card Cash Withdrawal?
Credit card cash withdrawal allows users to withdraw money from ATMs using their credit card up to a certain limit, known as the “cash advance limit”. This facility is separate from your total credit limit and usually comes with additional costs.
How it Works
- Withdraw cash from ATMs using your credit card
- No PIN may be required at some ATMs
- Transaction reflected immediately on your credit statement
Key Features of Credit Card Cash Withdrawal
Understanding the core features helps you evaluate when—and if—you should use this costly facility.
| Feature | Details |
| Facility Name | Cash Advance / Cash Withdrawal |
| Access Point | ATMs, Bank Branches (rarely) |
| Limit | Typically 20% to 40% of total credit limit |
| Charges | Cash advance fee + daily interest |
| Interest-Free Period | Not applicable |
Charges Involved in Credit Card Cash Withdrawal
One of the most crucial things to understand is the cost involved. Most cardholders overlook these details, leading to heavy charges.
Common Fees
- Cash Advance Fee: 2.5% to 3.5% of the amount withdrawn or a fixed ₹300–₹500.
- Finance Charges: Daily interest from the date of withdrawal, usually 36% to 48% per annum.
- No Grace Period: Unlike card purchases, interest starts accruing immediately.
- Late Payment Charges: Applicable if you don’t pay on time.
| What You Must Know: Credit card cash withdrawals do not offer any grace period—interest starts from day one. |
Risks of Using Credit Cards for Cash Withdrawal
While it provides instant access to cash, there are risks associated with using this feature.
- High Financial Cost: Accumulating interest and charges can double your borrowed amount in months.
- Impact on Credit Score: High credit utilisation lowers your score, and failing to repay on time further damages your credit history.
- Security Concerns: ATM theft or skimming can compromise your card details.
| Mistakes to Avoid: Never use your credit card for cash unless you understand the total repayment impact. |
Alternatives to Credit Card Cash Withdrawal
Before turning to a costly cash advance, consider these smarter and more affordable financial options.
| Alternative | Why It’s Better |
| Personal Loan | Lower interest rate (10%–18% approx.) |
| BNPL Services | Available through apps with flexible tenure |
| EMI Conversion of Purchases | No interest in many cases |
| Airtel Flexi Credit | Fast, flexible, and fully digital access |
| Important to Know: You can convert large expenses to EMI and avoid ATM cash withdrawals altogether. |
Airtel Axis Bank Credit Card: An Efficient Spending Tool
While cash withdrawals are expensive, smart card usage can still offer value. The Airtel Axis Bank Credit Card:
- Offers a credit limit up to ₹5 lakhs
- Provides cashback on utility payments
- Saves you up to ₹16,000 annually
- Offers lounge access and exclusive offers
Explore the benefits of Airtel Axis Bank Credit Card today.
How to Avoid Getting Trapped in Debt?
A few disciplined habits can help you use credit wisely and steer clear of long-term debt.
- Never withdraw beyond your actual need
- Avoid using multiple cards for cash withdrawals
- Choose financial products that suit your repayment capability
- Track billing cycle to know when interest kicks in
- Read terms & conditions before using cash advance options
Make Smarter Moves with Safer Financial Choices
Credit card cash withdrawal should be your last resort—not your first. With rising interest rates and hidden charges, exploring safer, more affordable alternatives is essential.
Consider building financial discipline with debt management techniques and understanding compound interest effects to avoid future financial strain. Airtel Finance offers digital-first solutions like the Airtel Axis Bank Credit Card and Flexi Credit—designed for convenience, control, and cost-efficiency. These options help you handle emergencies without the burden of steep charges. Secure funds smarter with Airtel Finance today.
FAQs
1. Is credit card cash withdrawal safe to use?
Yes, it’s safe but comes with high fees and interest from the date of withdrawal.
2. Do I earn rewards on credit card cash withdrawals?
No, most credit cards do not offer any rewards or cashback on cash withdrawals.
3. Can I withdraw the full credit limit as cash?
No, usually only 20–40% of your total credit limit is available for cash withdrawal.
4. Is there an interest-free period on cash withdrawals?
No, interest starts accruing immediately—there is no grace period on cash advances.
5. Will cash withdrawals affect my credit score?
Yes, excessive usage increases credit utilisation and can negatively impact your credit score.
