When you need cash because of an emergency or to pay bills, you may wonder if it's possible to withdraw it from your credit card. It is; many credit card companies do allow you to get funds from your card through a cash advance. You can normally do this at an ATM: insert your credit card, enter your PIN, and you should see an option for "cash advance."
While that can be convenient in a pinch, cash advances also have some drawbacks. So before using your credit card to get cash, it's important to weigh the pros and cons.Key Takeaways
- Many credit card companies allow you to withdraw money from your card through a cash advance.
- Depending on the card, you may be able to withdraw cash by depositing it in a bank account, using your card at an ATM, or writing a convenience check.
- The easiest way to get cash from your credit card is to use an ATM. Insert your credit card into an ATM, enter your PIN, choose the cash advance option, and enter your withdrawal amount.
- Cash advances can have higher APRs than purchases or balance transfers, and interest starts accruing on them right away. Plus they often have fees.
How Credit Card Cash Advances Work
Typically, credit cards are meant to be used for making purchases. For instance, you use your card at the checkout in stores or type in your card number and expiration date to buy things online. As you make purchases, your available credit is reduced by that amount until you pay your credit card bill.Credit card cash advances work differently. If your card allows for them (and not all do), you might have one credit limit for purchases and another limit for cash advances, which is usually lower than your purchase limit. When you take a cash advance, you're borrowing money against this credit limit.
What's more, cash advances begin accruing interest immediately—unlike purchases, where you typically have a grace period of 20 to 30 days to pay off your bill before interest begins to accrue.
There are a number of ways to take a cash advance, including:- Requesting a cash transfer from your credit card to your bank account
- Withdrawing cash at an ATM
- Writing a convenience check to yourself and cashing it at a bank
- Insert your credit card into an ATM.
- Enter your PIN.
- If you can get a cash advance in this way, you should see an option for "cash advance" on the menu.
- Select this, and the machine will ask you how much cash you want to take out. Select the amount you need.
- The machine will dispense your cash.
Tip
How Much Does It Cost to Withdraw Cash From a Credit Card?
Cash advances aren't free. There are several costs to be aware of when taking one. First, there's the cash advance fee. This is a fee the credit card company charges simply for the convenience of withdrawing cash against your cash advance limit. It may be either a flat fee, such as $5 to $10, or a percentage of the advance of amount, whichever is greater. The amount can vary from card to card.You could also pay additional fees if you're withdrawing cash from a credit card at an ATM or bank branch. An ATM surcharge may apply, or you might have to pay a teller fee for this convenience.
The second part of the cash advance cost equation is the annual percentage rate (APR). In most cases, the cash advance APR is higher than the regular APR for purchases or balance transfers. And, as mentioned above, interest starts accruing immediately.
That's important to keep in mind if you're looking for a low-cost way to access cash. Compared to a short-term personal loan, for example, a cash advance could end up carrying a much higher interest rate.Important
When Cash Advances Don't Involve Cash
In some instances, transactions can be treated as a cash advance even when you're not withdrawing cash. For example, if you link your credit card to a bank account for overdraft protection any money that's used to cover overdrafts would be considered a cash advance. You may also find that certain transactions, such as using your card to purchase cryptocurrency, are treated as cash advances instead of purchases.
For that reason, it's helpful to read your credit card terms and conditions carefully so you know what is and isn't considered a cash advance.When you make a payment on your credit card bill, the minimum balance due will be applied to your regular purchase balance first. Any additional payment is applied to the balance with the highest APR next. So if you already have a purchase balance on your card, you may have to pay it in full before any payments are applied to your cash advance.
When Does It Make Sense to Withdraw Cash From a Credit Card?
Withdrawing cash from your credit card may seem like a good option if you're in a tight spot financially. For example, if your car breaks down and you need to pay a tow truck company that doesn't accept credit cards, then it may be your only choice. But if the situation isn't urgent, you may want to research other options for getting cash since a credit card advance can be expensive. For instance, you might consider:- Applying for an unsecured personal loan
- Borrowing money from friends or family
- Taking out a home equity loan
- Withdrawing money from an IRA or taking a 401(k) withdrawal or loan
- Liquidating CDs or selling off other assets to raise money
Note
Can You Get Cash From a Store Credit Card?
It depends. Some store cards are just like regular credit cards, albeit with benefits if you use the card at a particular store. You can sometimes get a cash advance with this kind of card. Other store cards are private label credit cards, and so are accepted by only one store; you generally can't take out cash on these cards.