While Credit Cards are proven to be the most helpful financial tool, they do come with a few limitations. The credit or cash limit in a Credit Card must be carefully considered. Let us understand what these terms mean, if there is any difference between the credit and cash limit on a Credit Card, and how you can check the cash limit on a Credit Card.

What is a Credit Card cash limit?

When you apply for a Credit Card, its cash limit is basically the maximum amount that you can withdraw using your Credit Card. You can withdraw some amount from the bank’s ATM within the limits it sets. However, you must repay the amount later, along with the interest and other related charges.

What is a Credit Card limit?

Credit Card limit is known as the maximum threshold you can spend using the card. The issuing company or the bank decides the credit limit. In simple words, upon issuing it to any user, the bank sets up a maximum limit beyond which you cannot spend. While terms like credit and cash limit in a Credit Card might sound the same, they are quite different.

The cash limit is the amount a user can withdraw in cash using their Credit Card, whereas the card limit is the maximum amount that you can withdraw using the Credit Card. The cash limit varies between banks. Issuers can also increase or decrease their cash limits depending on their spending habits and repayment behaviours, among various other factors.

Besides knowing the terms, conditions, and other policies, you should note the Credit Card interest rates when accepting yours from the bank.

Can your cash limit increase?

The issuer decides the cash limit when you apply for a Credit Card. It varies between 20% and 40% of the credit limit, which is the total amount a user spends using their Credit Card. While the cash limit remains in the mentioned brackets, there are still probabilities that your Credit Card issuer may increase or decrease your cash limit depending upon your spending behaviour, repayment habits, and various factors.

Cash limit in a Credit Card is defined by multiple factors, including your annual income, age, current debts, amount of credit in your name, employment status, credit history, and your credit score

Conclusion

If you handle it well, your credit limit may increase. Use your Credit Card regularly to make transactions or pay bills to increase your credit score and, eventually, your credit limit. You can also upgrade your Credit Card after getting a promotion or hike in your current salary. Consider getting a new one with a higher credit limit, since you may have a good credit history and are a responsible borrower for banks.