Most people don’t plan to withdraw cash using a credit card. It usually happens in a moment of urgency. Maybe your debit card isn’t working. Maybe you need cash late at night. Maybe there’s an emergency. The ATM is there, the card works, and within seconds the money is in your hand.
But that convenience comes at a price.
In India, credit card cash withdrawal charges are structured very differently from regular purchases. The system is designed in a way that makes cash advance one of the most expensive ways to borrow money for a short period. And what makes it risky is not just the transaction fee, but how interest is calculated from the very first day.
Over the years, while reviewing reader statements and real billing cases at Unifite.in, I’ve seen a pattern. People assume they will repay quickly, but even a delay of a few weeks can significantly increase the cost.
Disclaimer: This article is for educational purposes only and does not constitute professional financial advice. Charges mentioned are indicative and may vary depending on bank and card variant. Always verify details in your card’s Most Important Terms and Conditions (MITC).
What Is a Credit Card Cash Withdrawal?
A credit card cash withdrawal, also called a cash advance, allows you to withdraw physical cash from an ATM using your credit card. This is different from a regular purchase because:
- A separate cash advance fee is charged
- There is no interest-free period
- Interest starts from the day of withdrawal
- It uses a separate cash limit
For example:
If your total credit limit is ₹1,00,000 then your cash withdrawal limit may only be ₹20,000 to ₹40,000. Most banks allow only 20% to 40% of the total credit limit as a cash limit.
3 Main Charges in Credit Card Cash Withdrawal
1. Cash Advance Fee
This is a one-time transaction fee charged immediately when you withdraw cash.
Typical structure in India:
- 2.5% to 3.5% of withdrawn amount
- Minimum ₹250 to ₹500
Example:
If you withdraw ₹10,000 at 2.5%, the fee is ₹250.
But if the minimum charge is ₹500, you will pay ₹500 instead.
2. Interest Charges (Finance Charges)
This is the most expensive part.
Unlike retail purchases, interest begins from day one.
Typical rates:
- 2.5% to 3.5% per month
- 30% to 42% annually
- Calculated daily
There is no grace period.
Interest continues until the entire outstanding balance is cleared.
3. GST on Charges
An 18% GST is applied on:
- Cash advance fee
- Interest charges
This increases the overall cost further.
Bank-Wise Cash Advance Fee Comparison (Indicative)
| Bank | Cash Advance Fee |
|---|---|
| HDFC Bank | 2.5% or ₹500 (whichever higher) |
| ICICI Bank | 2.5% (minimum ₹300–₹500) |
| Axis Bank | 2.5% (minimum ₹500) |
| SBI Card | 2.5% (minimum ₹500) |
| Standard Chartered | 3% (minimum ₹300) |
| American Express | 3.5% (minimum ₹250) |
| Kotak Mahindra | 2.5% (minimum ₹500) |
| IndusInd | 2.5%–3% (minimum ₹250–₹500) |
| Yes Bank | 2.5% (minimum ₹500) |
Note: Rates are indicative and may vary by card type and policy updates.
Real Cost Example (Practical Scenario)
Scenario 1
Withdrawal: ₹10,000
Repayment: 20 days later
Monthly interest rate: 3.5%
Cash advance fee: ₹500 (minimum applied)
GST on fee: ₹90
Interest calculation:
Daily rate ≈ 3.5% ÷ 30 ≈ 0.116%
Interest for 20 days ≈ ₹233
GST on interest ≈ ₹42
Total extra cost ≈ ₹865
Effective cost = 8.65% in just 20 days.
Scenario 2
Withdrawal: ₹25,000
Repayment after 30 days
Cash advance fee ≈ ₹625
Interest ≈ ₹875
GST additional
Total cost can cross ₹1,600 depending on rate.
This shows how quickly charges accumulate.
The Repayment Order Rule (Important in 2026)
If you already have an outstanding balance and you withdraw cash, repayment allocation matters.
Under RBI’s fair practices framework, payments must first clear:
- Minimum Amount Due
- Fees and charges
- Highest interest-bearing balance
Cash advances usually carry the highest interest rate. So payments are adjusted accordingly after minimum dues are cleared.
Important: If any cash advance remains unpaid, new purchases may also lose their interest-free benefit.
This is why clearing the full outstanding balance quickly is essential.
Does Credit Card Cash Withdrawal Affect Credit Score?
Withdrawing cash itself does not directly reduce your credit score.
However, it can:
- Increase your credit utilization ratio
- Increase total outstanding balance
- Raise repayment burden
- Increase risk of missed payment
If repayment is delayed, credit score impact becomes possible. Also Check out our detailed guide on Credit Card Charges Hidden Fees.
When Should You Use Cash Advance?
Use only in real emergencies:
- Medical emergency
- Travel crisis
- Temporary banking issue
- Immediate unavoidable expense
It should not be used for lifestyle spending.
Better Alternatives to Credit Card Cash Withdrawal
Before using a cash advance, consider:
- Debit card withdrawal
- Emergency savings
- Pre-approved personal loan
- Bank overdraft facility
- Rearranging short-term expenses
In many cases, a short-term loan with structured EMI is cheaper than cash withdrawal.
Tips to Minimize Charges
If you have already withdrawn cash:
- Repay the full amount immediately
- Avoid paying only the minimum due
- Do not make additional purchases
- Monitor your statement carefully
- Check your card’s MITC document for exact rates
The faster you repay, the lower the interest burden.
Frequently Asked Questions
How much are credit card cash withdrawal charges in India?
Typically 2.5% to 3.5% of the withdrawn amount, subject to a minimum ₹250 to ₹500.
Is there any interest-free period?
No. Interest starts from the day of withdrawal.
What is the cash withdrawal limit?
Usually 20% to 40% of your total credit limit.
Can I convert a cash advance into EMI?
Some banks allow conversion after billing, but interest from the withdrawal date is still applicable.
Is cash withdrawal cheaper than a personal loan?
Generally no. Personal loans often have lower effective cost compared to cash advances.
Final Thoughts
Credit card cash withdrawal charges in India are structured to discourage frequent use. Between transaction fees, daily interest, and GST, the cost can increase quickly even for small amounts.
If you must use it, withdraw the minimum required and repay as soon as possible. Smart credit card usage is not about access to money. It is about controlling cost and protecting your financial stability.
Stay disciplined. Stay informed.
