What Are The Different Methods To Check Cash Limit In A Credit Card

credit card limit

Credit cards offer tremendous versatility in payment and facilitate the payment of expenses in advance. There is no denying that credit cards have many benefits, but cash advances are probably the most convenient. If you need some last-minute spending money at the end of the month, a cash advance can help. In addition, with the help of a credit card limit, you can receive the money you need immediately without having to file paperwork and wait for bank approval, which is the most significant aspect. 

So, what is Credit Card Cash Limit?

In addition to purchasing merchandise, you can use credit cards to withdraw cash. If you’re going to an ATM or Bank with your credit card, you can’t take out more money than what your credit card allows you to. The amount you can withdraw with your credit card is called the “cash limit.” 

You’ll have to pay a fee when you use a credit card to withdraw cash. Cardholders can withdraw cash up to the maximum amount allowed, but they must pay back the original amount plus interest and any other fees associated with the withdrawal. 

What is Credit Limit?

Banks or financial institutions that issue credit cards set their credit limits, determining how much you can spend on your card. In other words, when a bank issues a credit card to a customer, they also set a spending limit you cannot exceed.

How Does a Credit Limit Differ from a Cash Limit?

While cash limits and credit card limits may appear identical, they are, in fact, very different. When your credit card’s credit limit is reached, you will not be able to use the card to make online purchases or purchases in stores.  However, there is a difference between credit card limits and cash limits. Your credit card limit may or may not be redeemable for cash. The cash limit is the maximum amount of cash you can withdraw from a bank using your card.

What is the Maximum Cash Withdrawal Permitted?

Cash withdrawal limits and interest rates on credit cards may also vary widely, and credit card companies can decide whether to include this function. Credit cards in India usually have Cash withdrawal limits between 20% and 40% of your overall credit limit. For instance, if your credit card has an INR 2 lakh rupee limit, you can withdraw between INR 40 thousand and INR 80 thousand in cash. And use the leftover balance for purchases. Your bank could also change the maximum amount you may withdraw depending on factors such as your spending habits and repayment history.

What Factors Influence a Credit Card’s Cash Limit?

Some of the elements that determine a credit card’s cash limit are:

  • Candidate’s employment history 
  • The applicant’s yearly salary
  • Applicant’s credit history
  • Applicant’s current debt
  • Applicant’s credit rating
  • The total amount of available credit in the applicant’s name
  • Applicant’s age

Apart from the factors discussed above, it’s also important to note that a higher credit limit may be granted to cardholders who use their cards responsibly and pay their bills on time.

How to Withdraw Cash with a Credit Card?

Withdrawing cash from an ATM with a credit card works just like one with a debit card. You take your credit card to an ATM and follow the instructions. You can withdraw cash from any ATM, regardless of who issued the card. Some financial institutions charge additional fees for using ATMs of other institutions. Some banks may also limit the amount of money you can withdraw from an ATM in a single session or throughout the day.

Therefore, before utilising the cash advance option, familiarise yourself with the terms and restrictions that apply to your cards and any associated fees or charges.

The Effect of Cash Advances on Credit Scores

Cash withdrawals from credit cards are not reported separately to credit reporting agencies. They will receive notifications about the total amount past due and any additional defaults. If you use a credit card to get cash, you won’t affect your score directly. But your credit score will suffer if you fail to pay your bills promptly.

The Bottom Line

There is a difference between credit and cash withdrawal limits on a credit card. Credit limits determine how much can be spent with a credit card, while cash withdrawal limits determine how much a cardholder can withdraw in cash. It is best to avoid withdrawing cash from a credit card unless necessary.