You should carefully consider making cash advances on your credit card

Answer:

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Credit cards are not only used to pay for goods and services but also allow cardholders to withdraw cash within specified limits. However, this is typically a costly option, so users should carefully consider their decision before proceeding, especially when the need for cash is only short-term.

Fees and interest accrue immediately upon cash withdrawal

Unlike credit card payment transactions, which may qualify for an interest-free period depending on each bank’s policy, cash withdrawn from a credit card typically begins accruing interest from the moment the transaction occurs. In addition, cardholders must pay a cash withdrawal fee according to the bank’s fee schedule.

Cash withdrawal fees in the market typically range from 1–4% of the transaction amount, while interest rates on withdrawn cash are generally high, depending on the card type and bank.

For example, for a withdrawal of VND 10 million with a 4% fee, the withdrawal fee alone is VND 400,000. If this amount remains as outstanding debt, the cardholder must also pay additional interest based on the duration and applicable interest rate.

Therefore, the actual amount to be repaid may be significantly higher than the initial amount received.

Cash withdrawal limits are also restricted

Not the entire credit limit of the card can be converted into cash. In addition to the limits set by the issuing bank, current laws also impose limits on the total amount of cash that can be withdrawn from a credit card.

According to regulations effective in 2025, the total cash withdrawal limit per credit card BIN is capped at VND 100 million per month. The specific limit for each customer depends on the bank’s policies and the type of card being used.

Therefore, before making a cash withdrawal, customers should check their remaining limit, withdrawal fees, and the interest rate applicable to their specific card, rather than relying solely on their approved credit limit.

Should only be considered a solution when truly necessary

Withdrawing cash from a credit card can be helpful in situations where you need money urgently and plan to repay it quickly. However, if used frequently to cover expenses, pay off debts, or make up for a shortfall in income, the debt can quickly grow due to fees and interest.

In particular, paying only the minimum amount due each billing cycle does not mean the debt is being resolved. The remaining balance continues to accrue interest according to the card’s terms, prolonging the repayment period and increasing the total cost.

Avoid using “cash advance” services or cash-out services that lack transparency

Users should also be cautious of advertised services that offer low-fee, high-limit credit card cash advances or promise to convert purchases into cash.

Providing card information, security codes, or conducting transactions that deviate from the card’s intended purpose may expose customers to the risk of information theft, unauthorized transactions, and issues related to the card’s terms of use.

If you really need cash, a safer option is to conduct the transaction directly through the bank’s official channels and carefully review the fee schedule and interest rates before confirming.

Calculate your ability to repay before withdrawing

Before deciding to withdraw cash from a credit card, users should answer three questions: How much money do you need? How long will it take to pay off the entire amount? What is the total amount of fees and interest you’ll have to pay?

If you do not have a reliable source of funds to pay off the balance in the short term, withdrawing cash from a credit card may lead to greater financial pressure.

Essentially, this is a form of credit use with relatively high costs. Therefore, cash advances should be considered a temporary solution, not a source of funds to sustain regular spending.

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