When an unexpected expense hits or your salary is delayed, it is tempting to use your credit card to withdraw cash from an ATM, just like a debit card. You can do it — but it is one of the most expensive ways to borrow money in India, and most people do not realise how expensive until the statement arrives.
This guide explains how credit card cash withdrawal works, what it really costs in 2026, and the cheaper alternatives you should check first.
How Credit Card Cash Withdrawal Works
A credit card cash withdrawal — technically called a Credit Card Advance — lets you borrow cash against your credit card’s cash limit. It is a short-term loan, and it is available immediately: no paperwork, no approval process, no waiting.
To withdraw cash at an ATM:
1. Set a cash advance PIN first, if you have not already — through your bank’s app, net banking, or phone banking. Your purchase PIN and your cash PIN may be different.
2. Insert your credit card at any ATM, enter the PIN, and select cash withdrawal.
3. Collect your cash — and keep the receipt, so you have a record of the amount and the date.
You can also get cash through convenience cheques or by transferring money from your card to your bank account, where your issuer offers it — but the charges are the same.
Your Cash Limit: Usually 20–40% of Your Credit Limit
Your cash withdrawal limit is a separate, smaller limit inside your total credit limit. Most Indian banks set it at 20–40% of your total credit limit. For example, if your credit limit is ₹70,000, your cash limit might be ₹14,000–₹28,000. (Some cards allow more — SBI Card allows up to 80% on some cards.) Check your statement or your card’s Most Important Terms and Conditions (MITC) for your exact limit.
The bank sets the limit based on your credit profile, income, and repayment history — and it can change.
What It Really Costs in 2026
This is where most people get a shock. A cash advance has three costs, and none of them has an interest-free period.
1. Cash advance fee — 2.5%, minimum ₹250–₹500
Charged immediately, on every withdrawal. As of November 2026, the major issuers charge 2.5% of the amount withdrawn, with a minimum of ₹500 (SBI Card, HDFC Bank, ICICI Bank, Axis Bank on most cards). Some premium cards waive the fee entirely — Axis Magnus and HDFC Infinia, for example. 18% GST applies on the fee.
2. Interest — 3.4–3.75% per month, from day one
This is the expensive part. Interest on a cash advance is charged daily, from the day you withdraw, until you repay in full. There is no interest-free period — unlike purchases, which get up to ~50 days.
Typical rates on standard cards in 2026:
– SBI Card: 3.75% per month (45% per year)
– HDFC Bank: ~3.49–3.50% per month
– ICICI Bank: from 3.40% per month (40.8% per year)
– Axis Bank: 3–4% per month on most cards
18% GST applies to the interest too.
3. What that means in rupees
| Amount withdrawn | Repaid after | Approximate total cost |
|---|---|---|
| ₹10,000 | 30 days | ~₹930–₹960 (fee + interest + GST) |
| ₹20,000 | 30 days | ~₹1,250 + GST (₹500 fee + ₹750 interest) |
At ~₹1,250 for a month’s use of ₹20,000, a cash advance costs about 75% annualised. That is roughly double the cost of a personal loan, and far more than a loan on your credit card.
The Other Costs People Miss
- No rewards. Cash advances do not earn reward points or cashback.
- Interest keeps accruing. Even if you make the minimum credit card payment, interest on the cash advance keeps building daily until the whole advance is repaid. Paying it off quickly is the single most effective way to limit the damage.
- It can hurt your credit score. Frequent or large cash advances raise your credit utilisation ratio and can lower your score. Issuers may also read repeated cash advances as a sign of financial stress.
- International withdrawals cost more. Withdrawing cash abroad adds a foreign transaction / forex markup (typically 3.5%) on top of the cash advance fee and interest. Check with your issuer before travelling.
Also read: How to Pay Your House Rent Using Your Credit Card?
Cheaper Alternatives — Check These First
Before you withdraw cash on your credit card, check these options, roughly in order of cost:
1. A loan on your credit card. Most issuers offer a pre-approved loan against your card, paid into your bank account and repaid in EMIs over 6–36 months. As of September 2026, these typically cost 1–2% per month with a known processing fee — far cheaper than a cash advance, and with a fixed repayment schedule.
2. A personal loan. For larger amounts, a personal loan usually has a lower interest rate and a longer repayment term than a cash advance, making it more cost-effective.
3. EMI conversion. If the expense is a purchase, converting it to EMI (1–2% per month) is cheaper than taking cash and then paying for the purchase.
4. Your emergency fund or a short-term overdraft. If you have savings, using them is cheaper than any form of borrowing. An overdraft on your savings account is also usually cheaper than a cash advance.
A cash advance makes sense only as a genuine last resort — a small amount, for a few days, when no other option is available, and repaid as fast as possible.
How to Withdraw Cash Responsibly
If you do need to use it:
– Withdraw the minimum you need. Every rupee costs 2.5% upfront plus ~3.5% a month.
– Repay it immediately — ideally the same week. Interest is daily, so every day counts.
– Use your own bank’s ATM where possible, to avoid any additional ATM charges.
– Do not use it regularly. Repeated cash advances are a warning sign — of a cash-flow problem that needs a plan, not a more expensive way to borrow.
– Check your MITC. Rates vary by card and change over time. The figures in this post are from November 2026; your card’s terms are the ones that apply to you.
The Bottom Line
A credit card cash advance gives you instant cash with no paperwork — and charges you heavily for the privilege: a 2.5% fee (minimum ₹500) plus 3.4–3.75% interest a month from day one, with GST on top, and no interest-free period. On ₹20,000 for a month, that is about ₹1,250 plus GST.
Use it only as a last resort, for a small amount, and repay it as fast as you can. For anything larger or longer, a loan on your credit card or a personal loan will almost always be cheaper.
If you want to learn more about Tax Preparation Requires, please visit our Finance category.
Frequently Asked Questions (FAQs)
Is withdrawing cash from a credit card better than using a personal loan?
No, for most cases. A cash advance offers instant access with no documentation, but it costs a 2.5% fee plus 3.4–3.75% interest a month from day one. A personal loan usually has a lower interest rate and a longer repayment term, making it more cost-effective for larger amounts. A loan on your credit card (1–2% per month) is also cheaper.
How long does it take to repay a cash advance?
Repayment follows your credit card billing cycle, but interest accrues daily from the date of withdrawal until the amount is fully paid. Paying it off quickly — ideally within days — reduces the interest cost significantly.
Can I use my credit card to withdraw cash internationally?
Yes, most credit cards allow international cash withdrawals at ATMs, but you will pay the cash advance fee and interest plus a foreign transaction / forex markup (typically 3.5%). Check with your card issuer before withdrawing cash abroad.
How can I avoid high charges on credit card cash withdrawals?
Limit cash withdrawals, repay the amount as quickly as possible, use your own bank’s ATMs to avoid additional fees, and consider cheaper alternatives first — a loan on your credit card, a personal loan, or EMI conversion.
Does using the cash advance facility affect my credit score?
Yes, it can. Frequent or large cash advances raise your credit utilisation ratio and may lower your credit score. Issuers may also see repeated cash advances as a sign of financial stress. Use cash advances sparingly and repay them promptly.
