Withdrawing Cash From a Credit Card: What To Expect

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Your credit cards serve as valuable tools in your financial portfolio. They can help you build your credit score or create a solid history to help you secure loans. Often, you’ll use your credit card for a planned purchase to earn rewards or to buy something online. Sometimes, your credit card provides you a bridge until payday, when you plan to pay off that bag of groceries you put on your card. 

Your credit card might also allow you to request a cash advance at an ATM should you need emergency money, but it shouldn’t be your first choice if you have other sources of quick cash. Keep reading to learn how to get cash from a credit card.

Withdrawing Cash From a Credit Card: Quick Take

Many credit cards offer the option to get cash advances. When you choose that option, you’re essentially taking a loan against your open line of credit. Some banks limit the amount of cash you can take, but no matter how many $20 bills come out of the ATM, you’ll pay an upfront fee and a higher interest rate. 

The amount of each is spelled out in the credit card agreement that comes with your card, but who saves those? Before taking a cash advance, it’s worth a call to the bank to find out just how much that cash will cost you.

What Is a Cash Advance?

Any time you use a credit card or withdraw money, you’re taking out a loan to complete a transaction. With a cash advance, you’re just removing the purchase part of that equation and getting the cash directly. The total is still added to your same credit card balance. That might not be a logical choice if you have cash in your checking account, but plenty of people find themselves in a short-term pinch between paychecks and have limited options.

How To Get Cash From a Credit Card

Your options will likely vary depending on your credit card company, but the most common methods for getting a cash advance from a credit card are either through a check or at an ATM.

Your credit card issuer might have sent you a check. If that’s the case, you’ll fill out the amount you need, up to the limit of your available credit, and deposit it into your checking account.

If you’ll be getting the money at an ATM, you’ll need a PIN — just as you would with your debit card. Your issuer can assist you in setting up a PIN if you don’t have one, or you might be able to set one up by signing in to your credit card account online.

How To Get a Cash Advance at an ATM

Once you have your PIN in hand, you can head to the ATM to get your cash advance. The process is similar to what you do when you withdraw cash using the debit card linked to your bank account. To get a cash advance, you’ll do the following:

• Insert your credit card into the ATM.
• Enter your PIN.
• Choose the proper action. Options will be listed as “cash withdrawal,” “cash advance” or something similar.
• Select credit instead of debit, if asked.
• Enter the amount you want to withdraw.
• Accept any fees listed to finish your transaction.

The Cost of a Cash Advance

The clear advantage of a cash advance is convenience. Life is often full of unexpected surprises that you’ll need cash to resolve, and having a backup plan — such as a rainy day fund — for when you need cash can be very helpful. However, convenience and urgency usually come at a cost, and that’s true with the fees you’ll pay for a cash advance.

Cash advances are basically like your credit card company lending you money, so they will tack on a hefty charge for the service. In addition to the charge, cash advances might also have transaction fees and a higher APR than normal purchases.

Plus, in some cases, there are ATM fees to pay. Before you go through with your advance, it is wise to know exactly what fees will be added to your total and what kind of interest will be attached.

Ways To Avoid a Cash Advance

When you know you’re running low on cash, take action immediately to save the funds you have until your next payday. This requires both planning and willpower.

Before withdrawing cash from a credit card, here are some key takeaways to consider:

• Stay on top of your finances. Your online banking settings could give you the option to be alerted when your account balance runs low. That will help you to make decisions about spending before payday.
• When you know you’re running low on cash, reconsider your purchases and buy only what is essential for now.
• You might have some upcoming essential expenses that must be paid in cash and others that can be paid by card, such as gas. If using your credit card will be inevitable, pay for the gas with your credit card instead of taking a cash advance. You’ll pay a lesser interest rate and will avoid the extra fees.
• Ask some of your creditors to extend your payment deadline. Your power company, for example, might be willing to extend your payment over time. It doesn’t hurt to ask.

Final Take To GO

If you don’t have emergency money set aside, a cash advance from your credit card is one alternative, and you can weigh the pros and cons. However, the cost of cash advances means that they should be just about your last resort. Cash advances typically come with a higher APR than normal purchases, and that’s on top of the initial fee that can run as high as 5% and a potential ATM fee.

All in all, if you have no other option, credit card cash advances can be a valuable convenience to help you bridge a period when you’re low on cash, but they’re a costly alternative that can and should be avoided with better planning and budgeting wherever possible.

Caitlyn Moorhead and Joel Anderson contributed to the reporting for this article.

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