What is a bank card money advance price? Charges, curiosity and dangers defined | Mint

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If you’re a bank card consumer in India, withdrawing money utilizing a bank card, also referred to as money advance generally is a pricey train. Given such a transaction offers speedy liquidity, nonetheless it comes with a number of severe penalties resembling vital charges and curiosity fees that each one present and aspirational bank card customers should concentrate on.

A credit card is nothing however a credit score line offered to card holders by lending establishments to help customers in assembly their credit score obligations. That is why such credit score devices should be used judiciously and responsibly by customers primarily to maintain their credit health safe.

What is a money advance price?

A money advance price is charged if you withdraw money by means of an Automated Teller machine (ATM) utilizing your bank card. This explicit price is mostly a share of the quantity withdrawn or a pre-decided flat price, whichever is extra.

For instance, HDFC Bank levies a money advance price of two.5% of the overall withdrawal quantity of ₹500, whichever is larger. On related strains Kotak Bank fees ₹300 per ₹10,000 or half thereof, capped at a most of two.5% of the advance quantity or ₹500 whichever is larger.

Credit card money charges by main Indian banks as of May 2025

BankApplicable money advance price
HDFC Bank2.5% of the withdrawal quantity or ₹500, whichever is larger.
ICICI Bank2.5% to three% of the withdrawal quantity, topic to a minimal of ₹250 to ₹500
Kotak Mahindra Bank ₹300 per ₹10,000 or half thereof; most of two.5% of the advance quantity or ₹500, whichever is larger.
State Bank of India2.5% of the withdrawal quantity or ₹500, whichever is larger, relevant at each home and worldwide ATMs

 

Note: The charges mentioned above are illustrative in nature solely. They are topic to vary on the discretion of the respective banks. It’s advisable to seek the advice of the official financial institution web sites or contact customer support for essentially the most present info.

Additional prices concerned

Further, past the preliminary price requirement, money advances additionally appeal to speedy curiosity fees with none grace interval in any respect. It can be vital to notice that interest rates are usually larger than these for normal bank card purchases.

The regulator has clearly mandated the banks to reveal the relevant fees for money advances. This step has been taken by the Reserve Bank of India (RBI) to facilitate bank card customers and convey transparency within the utilization of credit score.

Five key factors to think about:

  • Immediate curiosity accrual: Interest on money advances begins accruing instantly and continues to mount quickly if not taken care of, not like common credit card purchases that will even include an interest-free interval.
  • No reward factors: Cash withdrawals by means of bank cards, usually by no means assist cardholders earn reward points. This merely reduces the general worth proposition of your complete transaction.
  • Impact on credit score rating: When money is withdrawn steadily by means of bank cards, it might sign weak monetary administration to lenders and damage your credit score. It has the potential of negatively affecting your creditworthiness.
  • Alternative choices: You may take into account different avenues for availing funds resembling personal loans, overdraft facility from a financial institution which may make it easier to in securing loans at decrease rates of interest and higher phrases.
  • High transaction charges: Cash advances principally carry steep processing charges and fees. This can considerably impression and improve your complete value of borrowing.
Also Read | Credit card for NRIs: Everything you need to know before applying

Regulatory oversight

The regulator i.e., RBI has clearly instructed banks and monetary establishments to say and elaborate upon all fees associated to bank card transactions, together with the costs relevant on money advances. The intention of such instructions by the regulator is to deliver extra transparency and accountability within the monetary system.

That is why bank card customers are suggested to verify, perceive and assessment the phrases and situations offered by their respective banks or Non-Banking Financial Companies (NBFCs) in order that they’re able to clearly perceive the particular relevant fees for every transaction thus fostering info based mostly monetary choice making.

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Hence, it’s a on condition that money advances assist in securing fast entry to funds, nonetheless the related charges and curiosity fees can accumulate quickly. Such mounting of curiosity over curiosity may lead to inflicting monetary difficulties to cardholders in a while and make issues rather more difficult for them if not resolved amicably.

That is why all cardholders ought to train warning earlier than choosing a credit card cash withdrawal and search for different comparatively much less dangerous means to avail funds immediately.

Disclaimer: Mint has a tie-up with fintechs for offering credit score; you will want to share your info should you apply. These tie-ups don’t affect our editorial content material. This article solely intends to coach and unfold consciousness about credit score wants like loans, bank cards and credit score scores. Mint doesn’t promote or encourage taking credit score, because it comes with a set of dangers resembling excessive rates of interest, hidden fees, and many others. We advise buyers to debate with licensed consultants earlier than taking any credit score.

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