What Is Available Cash Limit in a Credit Card?
Demystify your credit card's cash advance limit. Understand its definition, financial implications, and practical access.
An “available cash limit” on a credit card is a portion of your overall credit line that you can convert into cash. It functions as a short-term loan against your credit card’s borrowing capacity and is distinct from the credit limit used for standard purchases.
Understanding Cash Advance Limits
The cash advance limit on a credit card is a subset of your total credit limit, not an additional amount of credit. For instance, if your total credit limit is $10,000, your cash advance limit might be $2,000 or $3,000. This means you cannot withdraw more cash than this designated sub-limit, and using a cash advance reduces your overall available credit.
Credit card issuers establish separate, lower cash advance limits due to the higher risk associated with cash transactions. This separation helps manage the card issuer’s exposure to potential losses.
While both draw from your overall credit line, the specific rules and costs for each type of transaction differ significantly.
How Cash Advances Work
Cash advances incur specific fees that are added to the principal amount withdrawn. These fees are commonly either a flat rate, such as $10 or $15, or a percentage of the amount advanced, usually ranging from 3% to 5%. Some issuers may charge whichever is higher, for example, 5% or $15. If you withdraw cash from an ATM, you might also face additional ATM owner fees.
Interest usually begins accruing immediately from the transaction date, without any grace period. This differs from standard credit card purchases, which often have a grace period before interest applies if the full balance is paid by the due date. The Annual Percentage Rate (APR) for cash advances is generally higher than the APR for standard purchases, sometimes reaching close to 30% variable.
These transactions, including the advanced amount, fees, and accrued interest, will appear on your monthly credit card statement. The cash advance balance is often separated from other balances, such as those for purchases. While you must make minimum monthly payments, paying off the cash advance quickly is advisable to minimize the impact of the immediate and higher interest charges.
Accessing and Managing Your Cash Advance Limit
To determine your available cash limit, refer to your monthly credit card statement. This information is also accessible through your online banking portal or by contacting your card issuer’s customer service.
Common methods for obtaining a cash advance include withdrawing funds at an ATM using your credit card and a Personal Identification Number (PIN). If you do not have a PIN, you may be able to request one from your card issuer. Another option is visiting a bank branch and presenting your credit card along with a valid form of identification to a teller.
Some credit card issuers also provide convenience checks, which are checks linked to your cash advance limit that you can write for cash. In certain cases, you might be able to request a cash advance over the phone, with the funds deposited directly into your bank account. Daily ATM withdrawal limits may also apply, regardless of your credit card’s cash advance limit.