All About Credit Card Cash Withdrawal in UAE - Everyone Should Know

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Ever since the entry of credit cards into the modern payments system, the world has ceased to be the same as before. They have introduced all of us to a much more convenient way of carrying out our transactions. They have revolutionized the way people think about availing a loan or getting instant access to cash just by a simple swipe of their credit cards. They come loaded with features and benefits that make their use even more fruitful.

The credit card advance cash feature that is available on this simple piece of plastic opens up the entire world for you by letting you withdraw cash from your nearest bank ATM. This gives you access to instant funds and that too without any hassle of filing the correct documentation as well as waiting to get approved for the loan from your bank. This feature nevertheless comes with certain specific terms and conditions that every card user must be educated about. Therefore, while there are many reasons that make the use of credit cards alluring, one has to be aware of the credit card cash withdrawal charges that accompany such benefits.

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So, let us dive into the specifics of these charges and get a better understanding of this card in each of our pockets:

What Do We Mean by Credit Card Cash Withdrawal?

Firstly, credit card advance cash is the technical terminology that is used for the facility of credit card cash withdrawal. This facility enables the users of credit cards to withdraw cash by utilizing their credit card at a bank ATM. Since a credit card is typically used to carry out card transactions, the cash withdrawal option is one of those extra features that are offered by banks. By using this facility the card holders can easily withdraw cash up to a permissible limit. The card users however have to repay the amount along with an additional interest plus some other charges.

It is important to note, however, that this feature might not be offered with each and every credit card in the market. Similarly, the permissible limit for cash withdrawal will also differ from one credit card to another along with the finance charges levied on it. Therefore, every credit card user has to be aware of all the charges that are applicable to the credit card they are using.

How does Credit Card Cash Withdrawal Work in UAE?

While using your credit card in order to withdraw cash during a financial emergency might seem like an enticing alternative but it isn’t however since it might end up increasing your financial burden in the long run.

Every time you use your credit card to pay for your purchases, the amount is billed on your subsequent billing date. Depending upon your card provider as well as the date o your purchase, the credit card user is essentially given an interest-free period falling in the range of 15 to 45 days, 20 to 50 days, and so on. This period will be decided on the basis of the credit card issuer’s policies.

However, in the case of cash withdrawals made using credit cards, it is not the same. Every time the card holder withdraws some cash from their credit card, a new cycle, that is different from their credit card purchase cycle commences.

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The Difference Between the Credit Card Advance Cash Limit and the Credit Limit

While by credit limit we mean the maximum amount that can be spent using a particular credit card, the cash advance limit suggests the maximum amount of cash one can withdraw by using their credit card. This credit card advance cash limit is typically included in the credit limit of a credit card. The majority of the banks provide around 20 percent to 40 percent of the overall credit limit as an advance cash limit. For example, if your credit card comes with a total credit limit of AED 100,000, then you can easily withdraw a sum up to AED 20,000 to AED 40,000 as cash using that card. The rest of the amount should typically be spent only for carrying out card transactions.

The credit card advance cash limit is generally communicated to the card users by the bank at the time of card issuance. Another important point to note is that the credit limit offered might not be the same across all the credit card variants offered by a single card provider and hence it tends to vary from one customer to another. The advance cash limit on a certain card is not fixed however and is subject to go up or down upon the sole discretion of the card provider, at any point in time.

The card issuer may revise these limits occasionally or change them on the basis of different parameters like the spending patterns of the user, their repayment behavior, any default payments as well as other credit-related information gathered from the credit bureaus. These changes or revisions will be communicated by the bank to the card users via an email or text message.

Interest Cash Withdrawals Using Credit Cards

Unlike the retail purchases made using your credit card that come with an interest-free period of 20 to 50 days usually, cash withdrawals made using credit cards attract an interest rate charge from day one. This interest on a cash advance can be anywhere from 2.5 percent to 3.5 percent each month. Additionally, the card user is also charged a transaction fee that can be in the range of 2 to 3 percent of the amount of the transaction.

There’s more. The interest levied also has taxes deducted on it thus making cash withdrawals by using your credit card a costly affair. Let us look at the charges imposed on the credit card cash withdrawal below:

  1. Interest- Credit card advance cash by using a credit card do not enjoy an interest-free period and the interest rate can be in the range of  2.5 percent to 3.5 percent per month.
  2. Cash advance fee- Each time the card holder withdraws cash using their credit card, a cash advance fee is also levied on it, ranging from 2 to 3 percent of the transaction sum.
  3. Finance charges- Like most credit card transactions, the withdrawals of cash are also imposed with finance charges. These charges are applicable from the first day until the sum is fully paid off.
  4. Late payment fee- If the card holder fails to repay the full amount, they are charged with late payment fees on the outstanding amount. This fee can fall anywhere from 15 percent to 30 percent.

The Bottom Line

It is therefore important to carefully read the terms and conditions that are applicable on your credit cards along with being aware of all the associated charges before you make use of the cash advance facility. Also, remember the available cash limit on your card before you decide to withdraw cash in order to prevent yourself from going over the limit. This will further incur an overlimit charge on your transaction. Thus, being aware is the only way to be a master of your finance!


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