Everything You Need to Know About Cash Limits on Credit Cards

Ever wondered what is cash limit in a credit card? It is different from the total or available credit limit and showcases the amount you can get as cash. If you have a sudden cash crunch while in India or abroad, your card gives you a unique perk – the ability to withdraw cash from an ATM. You can use this cash advance to fulfil your needs if you’re eligible for it. It is not your available credit limit but a certain portion of it. Such useful facility, however, comes it charges, including:

• A processing fee
• An interest rate 

The interest may be higher or the same as the interest applied on unpaid balances, so be aware of it before you utilise the facility. Read on to know more. 

A Quick Guide to Cash Limits

This limit is set by the credit card company and ranges from 20% to 40% of your total limit in general. You can check if you qualify for a cash advance by:

• Logging in to your online account
• Checking the credit card company’s mobile app
• Calling customer service 

Nothing is free in life, and the same is true of this withdrawal feature too. Repaying the amount on time is key to avoid compounding interest, so check the fees applicable. This will be mentioned in your credit card’s Most Important Terms and Conditions document. Usually, this feature incurs higher interest than the regular interest rate, but it depends on the card you have. 

While some cards offer an interest-free duration within which to repay, most cards do not. This means you do not have the luxury to pay later but must plan to repay the amount immediately. 

• Example

Factors Impacting Your Credit Card Cash Limit

Your cash limit is influenced by your credit limit. This, in turn, is impacted by several key factors that reflect your financial situation and creditworthiness. These include:

• Current Debt: The total debt you have impacts your credit limit. More existing debt can lead to lower limits, as issuers view you as having a higher risk of defaulting. 

• Your Age: Your age can affect your limit. Younger applicants may receive lower limits due to a shorter credit history. 
• Credit Score: A strong credit score is crucial. Timely payments and responsible credit use signal to lenders that you are trustworthy and leads to a higher score. This indicates lower risk, often resulting in increased credit limits. Conversely, a lower score can limit your options.
• Your Annual Income: Higher incomes suggest better repayment ability, often leading to a higher credit limit.
• Credit Utilisation: This ratio measures how much credit you use compared to your total available credit. Lower utilisation is viewed positively and can lead to higher limits.
• Employment Status: A steady job can improve your chances. Consistent employment demonstrates reliability, making you a more appealing borrower.

Key Tips on Managing Cash limits on Credit Card Smartly

Here are some key tips to keep in mind regarding cash limits:

• Use cash advances carefully to avoid substantial charges, including cash advance fees and interest. 
• Try to use it only in emergencies, not for everyday expenses, since it come with higher liabilities.
• Regularly check your card’s statements to see your overall credit usage, including cash advances.  
• Periodically check your cash limit and negotiate for a better credit limit or a lower interest rates if your financial situation changes.  

Understanding the Distinctions Between Credit Limit and Cash Limit

The following table outlines the key differences between credit limits and cash limits:

Now that you know what cash limit in a credit card is, you can choose the best card for your needs. An option you can consider is the One Credit Card. With this card, you can withdraw cash from ATMs within the country and overseas to bridge any gaps. 

What’s more, it is a lifetime-free card, meaning you have to pay no annual or joining fees. With its advanced mobile app, you can monitor your expenses, handle your finances effectively and earn points with every purchase. Visit the website or download the app to apply now!