What is a credit card cash limit?
The cash limit on your credit card is the maximum amount of cash you can withdraw from an ATM using your card. This limit is set by the bank, and as a cardholder, you have the flexibility to withdraw cash up to this limit. It's important to remember that you'll need to repay this amount, along with any applicable interest and charges, by the due date specified on your credit card statement."
What is a credit limit?
A credit limit, often known as a credit card limit, is the maximum amount you can spend on your credit card. The credit limit is set when your card is issued.
The card issuer assesses eligibility based on the applicant's monthly income, age, job stability, and other factors. You cannot use your credit card when you have reached your credit limit.
In other circumstances, the bank will enable you to do transactions but will charge you high interest rates and fees.
Difference between credit card cash advance and credit limit
Credit card cash advance and the credit limit are different terms but are used interchangeably erroneously. These two terms represent different aspects of a credit card. A credit limit is the total amount you can spend using your credit card. So, your transactions are bound to fail if you try to use your credit card after exhausting the credit limit.
Credit cards offer facilities for borrowing money against your credit limit. This is called a cash advance. It involves withdrawing money from an ATM using your credit card. The cash advance limit is only a small percentage of the credit limit. Also, bear in mind that card issuers will charge you a cash advance fee when you borrow money using a credit card.
| Credit Limit | Cash Limit |
| It is the maximum amount you are allowed to spend with your credit card | It is the maximum cash you can withdraw from a bank or ATM using your card |
| Transactions beyond your credit limit may be unsuccessful | Cash advances are usually calculated as a percentage of the credit limit |
| No extra penalties are charged if you spend within your credit limit | Banks might charge a cash advance fee for making cash withdrawals |
| The credit limit is decided based on your income, age, job stability, and other eligibility factors | Most banks allow a cash limit to be 20%-40% of your total credit limit |
What is the different between cash limit and credit card limit?
The credit card limit, as the name suggests, is the maximum limit that the bank has assigned you for making purchases. This limit is usually determined based on a variety of factors such as your credit score, income, and financial standing.
On the other hand, the cash limit is the maximum amount of cash you can withdraw from an ATM using your credit card. This limit is usually a percentage of your total credit limit and is determined by the bank. It's important to note that cash withdrawals attract high-interest rates, and you should use them only in case of emergency.
In conclusion, while the credit card limit is for purchases, the cash limit is for cash withdrawals. By understanding the difference between the two, you can ensure that you use your credit card wisely and avoid any unnecessary fees or charges.
Can your cash limit be increased?
The issuer of the credit card sets the cash limit. It fluctuates between 20% and 40% of the cardholder's credit limit, which is the maximum sum that can be charged to the card. While the cash limit largely stays within the indicated ranges, there is still a potential that your credit card company could adjust (raise or lower) the cash limit based on your spending patterns, repayment patterns, and other factors.
What factors affect the cash limit in a credit card?
A cash limit in a credit card is defined by multiple factors as explained below
- Your annual income
- Your age
- Current debt on the you
- Amount of credit in your name
- Your employment status
- Your credit history
- Your credit score
In addition to the aforementioned considerations, you should keep in mind that there is a good probability your credit/cash limit will be low if you are applying for your first credit card. This is due to the bank or credit card issuer's uncertainty over your credit history at this time. You should be aware, though, that if you use your credit card responsibly and pay your bills on time, your credit limit may easily be raised. So, other than a few fundamental variables, you control your credit limit!
A credit card's cash limit is distinct from its credit limit. The credit limit is the total amount of money that a user can spend with his or her credit card, as opposed to the cash limit, which is the total amount of money that a user can withdraw in cash with his or her credit card. Typically, the cash limit is 20% to 40% of the user's credit limit.
Conclusion
In summary, while the cash limit on your credit card can be helpful, it’s important to use it judiciously. Make sure you understand the terms and conditions associated with cash withdrawals and take care not to overuse them. Using your credit card to make purchases and paying your bills on time can help ensure you gain the maximum benefits from your credit card.
Frequently asked questions
Both Bajaj Finserv DBS Bank Credit Card and Bajaj Finserv RBL Bank SuperCard offer a limit of up to Rs. 2 lakh.
A credit limit for cash, often referred to as a cash advance limit, is the maximum amount of cash you can withdraw from your credit card as a loan. This limit is typically a portion of your overall credit limit. It is important to note that cash advances often come with higher interest rates and additional fees, making them a costly way to borrow money. Cash advances should be used sparingly and only in emergencies.
No, the cash advance limit is not necessarily the same as the credit limit. While both limits are associated with your credit card, the cash advance limit is usually a lower amount than your overall credit limit. The cash advance limit represents the maximum amount you can withdraw as cash from an ATM or receive as a cash advance transaction, separate from your regular credit card purchases.
Yes, in many cases, you can request an increase in your cash limit on your credit card. However, the process and eligibility criteria for increasing this limit may vary depending on your credit card issuer. To request a cash limit increase, you should contact your credit card company's customer service or visit their website to submit a request. They may review your credit history and financial circumstances before approving or denying your request for a higher cash limit. Keep in mind that responsible use of credit is essential to maintain a good credit score and financial health.
