Archive · 18 Sep 2025
Credit Card Cash Advances: Expensive Loans to Avoid
Taking cash out of a credit card at an ATM seems easy, but it's expensive.
You get charged fees and very high interest rates from the moment you take the money out.
It's like getting a loan, but a really pricey one!
For instance, withdrawing ₹10,000 could end up costing ₹11,500 because of these extra charges.
Other options, like small personal loans, are usually much cheaper.
It's best to avoid using your credit card for cash since it can lead to owing a lot more money, fast.
Cash advances from credit cards incur immediate fees and high interest.
Interest rates often exceed 40% annually, calculated daily.
A cash advance fee of about 2.5% to 3% is charged upfront.
Alternatives like personal loans can be much cheaper.
Financial experts recommend against using credit cards for cash.
- Who
- Consumers
- What
- Withdrawing cash using a credit card
- When
- Upon withdrawing cash
- Where
- At ATMs
- Why
- The costs are very high compared to other options.
Consumers
Banks
Cash Withdrawal
Consumers
Consumers see credit card cash advances as convenient but are often unaware of the high costs.
Banks
Banks present cash advances as a service, emphasizing easy access to funds.
- Cash Advance Fee
- 2.5% to 3% of amount (plus tax)
- Example: ₹10,000 Withdrawal
- Can become ₹11,500 within weeks
- Interest Rate
- More than 40% per year (daily compounding)
- Interest Begins
- Immediately, no grace period
- Alternatives
- Personal loans, overdrafts, emergency funds