Many people wonder if credit cards can be used to withdraw cash like debit cards. The answer is yes, it is possible to withdraw cash using a credit card. However, this feature comes with high costs and risks, so caution is advised.
How to Withdraw Cash from a Credit Card
According to Techcombank’s website, there are currently two ways to withdraw cash from a credit card: at an ATM or at a bank branch.
Withdrawing Cash from a Credit Card at an ATM
The process of withdrawing cash from a credit card at an ATM is similar to that of a regular ATM card.
Here are the steps to withdraw cash from a credit card at an ATM:
Step 1: Insert your card into the ATM > Enter your PIN > Select “Withdrawal”
Step 2: Enter the amount you wish to withdraw > Confirm > Read the transaction fee notice on the screen.
Step 3: Agree > Print the receipt and wait for your cash.
Withdrawing cash from a credit card at an ATM. Source: VIB |
Withdrawing Cash from a Credit Card at a Bank Branch
To withdraw cash at a bank branch, customers need to bring their credit card and valid identification document such as a citizen ID card (the same one used during card registration). This process consists of the following four steps:
Step 1: Visit the bank branch/office that issued the card, present your citizen ID card, and take a queue number.
Step 2: Meet with a bank officer and request to withdraw cash from your credit card.
Step 3: Follow the instructions provided by the bank officer.
Step 4: Complete the procedure and receive your cash.
What You Need to Know About Withdrawing Cash from a Credit Card
High Withdrawal Fees and Interest Rates
It is important to consider the high costs associated with withdrawing cash using a credit card. Customers will be charged a withdrawal fee of up to 4% of the total amount withdrawn, plus interest rates of up to 20-30% per annum (depending on the bank). These interest rates are calculated from the date of the successful withdrawal. The formula for calculating the interest payable at the end of the period is as follows:
Interest = Withdrawal Amount x Interest Rate/365 x Number of Days of Withdrawal
Based on this formula, the higher the cash withdrawal amount, the higher the fees and interest rates applied. If customers cannot control their spending, this could result in significant additional costs.
Impact on Repayment Ability
As there is no interest-free period of 45-55 days, cash withdrawals from a credit card can significantly increase the outstanding balance at the end of the period.
If the full payment is not made by the due date, the cardholder will be charged late payment fees and interest on the late payment.
On the due date, if your financial situation does not allow for full payment, you may choose to pay the minimum balance (approximately 5% of the total principal balance). However, this is only a short-term solution to avoid penalty fees, as the remaining balance will continue to accrue interest until the full amount is repaid. Therefore, it is crucial to plan your finances accordingly to make timely payments and avoid the risk of losing your repayment ability.
Withdrawal Limit
Banks typically set a withdrawal limit for credit cards, which is usually around 70-80% of the total card limit. Additionally, cardholders need to ensure that the withdrawal limit at ATMs does not exceed 50-200 million VND per day and 20 million VND per transaction. As a result, withdrawing large amounts of cash may require multiple transactions and depend on the available cash in the ATM.
Be Wary of Unregulated Cash Withdrawal Services
Currently, there are many non-bank entities in the market offering cash withdrawal services from credit cards with low fees and high withdrawal limits, even up to 100% of the card limit. However, these services are illegal and may pose financial risks to cardholders.
When agreeing to use these services, customers are required to provide personal information, including card number, CVV/CVC code, and ID card details, to create a virtual transaction in the cardholder’s name. This is done to disguise the cash withdrawal as a regular card swipe transaction.
Banks have the right to review the legality of such transactions and take appropriate actions, including card cancellation, blocking, or reducing the cardholder’s credit score and eligibility for future loans or credit card applications.
Hạnh Nguyên
– 13:07 21/03/2025
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