Understanding how to withdraw cash from credit cards can be crucial in times of need. In this informative guide, we discuss the withdrawal process step-by-step, costs, and potential effects on your credit score.
We also explore different methods and alternatives to help you make well-informed decisions about using cash advances. Dive into this article to gain valuable insights and guidance on managing credit card cash advances wisely.
Can you withdraw cash from a credit card?
Yes, you can withdraw cash from a credit card, provided your credit card issuer allows cash advances.
Compared to typical credit card purchases, cash advances often come with higher interest rates and additional fees. It's recommended to only use cash advances to cover emergency expenses since they can be very costly and could potentially damage your credit with a higher credit utilization ratio.
How to Get Cash From a Credit Card at an ATM?
To get cash from a credit card at an ATM, follow these detailed steps:
- Check if cash advances are permitted: Before making an ATM withdrawal, you should check your credit card agreement or contact the customer service line of your card issuer to see if cash advances are permitted for your credit card.
- Obtain your cash advance PIN: Your credit card cash advance Personal Identification Number (PIN) is different from the one you use for regular purchases.
- Find a compatible ATM: Find a compatible ATM for your credit card. Major credit cards are typically accepted at ATMs, such as Visa, Mastercard, American Express, and Discover. To be sure, check your card issuer's website for a list of compatible ATMs, or see if your card's logo appears on the list of supported cards on the ATM.
- Insert your credit card: Insert your credit card into the ATM's card slot and enter your cash advance PIN when prompted.
- Select "Cash Advance" or "Credit Card Advance": The ATM may present you with several options like "Withdrawal," "Balance Inquiry," or "Cash Advance." Choose "Cash Advance" or "Credit Card Advance" to proceed.
- Enter the desired withdrawal amount: Enter your desired withdrawal amount, making sure it is within the withdrawal limits of the ATM machine as well as your cash advance limit set by the issuer.
- Collect your cash and receipt: Once your transaction is approved, collect your cash and receipt. The receipt will display the transaction details, including any applicable fees.
Request a cash advance PIN from your card issuer if you don't have one. You may receive your PIN immediately through your online account or mobile app, while it could take a few days for some lenders.
Remember to review your credit card statement carefully to ensure that the transaction and associated fees are accurately reflected.
How to Get a Cash Advance Using a Check
Some credit card issuers provide convenience checks, which can be used to access cash advances from your credit card account. Here are the detailed steps to get a cash advance using a convenience check:
- Verify your credit card allows cash advances
- Request convenience checks: You can contact the customer service department to see if convenience checks are offered by your credit card issuer. If available, the checks may be mailed to your postal address or delivered to you at a nearby branch.
- Fill out the check: Write the check to yourself or the person you'd like to pay. Fill in the date, the payee's name, and the amount you want to withdraw. Remember to write an amount within your cash advance limit.
- Endorse the check: If you're writing the check to yourself, sign the back of the check in the designated area.
- Deposit or cash the check: You can deposit or cash the check either in your bank or the payee's bank. Also, notice that after depositing a check, the bank might put a hold on the money, which could delay its availability for a few days.
- Record the transaction: Write down the transaction details, including the date, amount, and any fees associated with the cash advance. This will help you keep track of your spending and manage your credit card balance.
How to Get a Cash Advance in a Branch
You can also get a cash advance from your credit card by visiting a bank branch. Here are the detailed steps to get a cash advance in a branch:
- Make sure your credit card provides cash advances
- Locate a compatible bank branch: Find a bank branch that allows cash advances from your credit card, such as a branch or a partner bank of your credit card issuer. To view a list of suitable branches, you should visit your card issuer's website or get in touch with the customer service department.
- Gather necessary documents: Bring your credit card, a valid government-issued photo ID (such as a driver's license or passport), and any additional documentation required by the bank, such as a recent bank statement or utility bill.
- Request a cash advance: Request a cash advance from your credit card by approaching the teller with the documentation required by the bank, including your credit card, photo ID, and any additional information.
- Enter the desired withdrawal amount: Inform the teller of the amount you wish to withdraw. Make sure the amount is within your cash advance limit.
- Receive your cash and receipt: Once your transaction is approved, the teller will provide you with the cash and a receipt.
To confirm your identity, the teller may request your Personal Identification Number (PIN) for cash advances or your signature.
How can I get cash off my credit card without a PIN?
If you don't have a cash advance PIN for your credit card or have misplaced it, there are 4 alternative methods to get cash without using a PIN.
Visit a bank branch associated with your credit card issuer and request a cash advance in person. You'll need to present your credit card and a valid form of identification, such as a driver's license or passport. The teller will verify your identity and process the cash advance without requiring a PIN.
If convenience checks are offered by your credit card issuer, you can use them to withdraw cash advances from your credit card without a PIN. First, you need to write a check to yourself or any other payee and sign the back of the check. Then you can either deposit it or cash it at a bank.
However, keep in mind that using access checks typically triggers cash advance fees and interest charges.
With a money-transfer service like Western Union or MoneyGram, you can transfer money to yourself with your credit card. To receive the money, you must first create an account for the service with your credit card details, and then you can withdraw the cash from a nearby agent's office.
Such transfers involve a service fee and may be regarded as a cash advance by your credit card issuer, leading to additional charges on top of the service fee and higher interest rates.
Digital payment service
You can use digital payment services like PayPal, Venmo, or Cash App to withdraw money from your credit card without a PIN. By attaching your credit card to the payment service, you can send the money to a friend or family first and ask them to transfer back or hand it in cash.
What is a credit card cash advance?
A credit card cash advance is a feature offered by some credit card issuers that allow cardholders to withdraw cash using their credit card. Cash advances can be obtained through various methods, including ATMs, bank branches, convenience checks, and money-transfer services.
Cash advances, in contrast to typical credit card purchases, may have higher interest rates and extra costs, like one-time cash advance fees or ATM fees. In addition, cash Advances do not have a grace period like regular credit card purchases, which means interest begins to accrue immediately.
How do credit card cash advances work?
To illustrate how credit card cash advances work, let's consider an example:
John has a credit card with a $5,000 credit limit and a cash advance limit of $2,000. He needs to withdraw $500 in cash for an emergency expense. John visits an ATM that accepts his credit card and uses his cash advance PIN to withdraw the money.
Here's what happens next:
- Cash advance transaction: The $500 withdrawal is recorded as a cash advance on John's credit card account.
- Cash advance fee: A one-time cash advance fee equal to 3% of the withdrawal amount, or $15 ($500 * 0.03), will be charged by John's credit card issuer by adding it to his credit card balance.
- ATM fee: The ATM charges John a $3 fee for the withdrawal. This fee is also added to his credit card balance.
- Interest fees: Cash advances do not have a grace period as regular credit card purchases do, which means the total amount of the cash advance, including fees, starts to accrue interest right away.
If John's cash advance interest rate is 25% annually, he will start accruing interest daily on the total amount withdrawn, including fees ($500 + $15 + $3 = $518).
- Credit score impact: John's credit card balance will go up due to the cash advance amount, including fees, which can lower his credit score through a higher credit utilization rate.
John should repay the cash advance as soon as possible to minimize interest charges and mitigate any potential negative impact on his credit score.
Fees for a credit card cash advance
Here are some common fees associated with credit card cash advances:
- Cash advance fee: A one-time cash advance fee, represented as a percentage of the withdrawal amount, is typically charged by credit card issuers.
This fee can range from 2% to 5% or may have a minimum flat amount, such as $10 or $20, whichever is greater. For example, if you withdraw $500 and your card issuer charges a 4% cash advance fee, you would pay a fee of $20.
- ATM fee: The owner of the ATM may additionally charge you an ATM fee if you use it to withdraw cash, which varies from a few dollars to $10 or more depending on the ATM you use.
- Foreign transaction fee: If you take a cash advance in a foreign country, your credit card issuer may charge a foreign transaction fee. This fee is usually a percentage of the transaction amount, typically around 3%.
- Additional bank fees: If you obtain a cash advance at a bank branch or through a convenience check, the bank may charge additional fees for these services.
Interest for a credit card cash advance
Interest rates for credit card cash advances are typically higher than those for regular credit card purchases. Here's what you need to know about interest on cash advances:
- Higher interest rates: Cash advances often come with high-interest rates ranging from 20% to 30% annually or more, depending on your credit card issuer and your credit.
- No grace period: Regular credit card purchases usually have a grace period of around 21 to 25 days, which charges no interest if you make your final payment on time. However, cash advances don't have such a grace period and start accruing interest immediately.
- Interest calculation: Interest on cash advances is typically calculated using the average daily balance method. This means that interest accrues daily on the outstanding cash advance balance, including any associated fees (such as cash advance fees or ATM fees).
The daily interest rate is determined by dividing the annual percentage rate (APR) by 365 (or 360, depending on the card issuer).
- Compound interest: you will be charged interest on top of the interest as cash advances calculate costs on a daily basis, which can lead to a higher borrowing cost in case of default.
To minimize the interest charges on a cash advance, it's essential to repay the balance as quickly as possible.
Reasons why we don't recommend credit card cash advances
- They're very expensive: Credit card cash advances are notorious for their high costs due to elevated interest rates and one-time fees.
- They can impact your credit score: As a type of credit card debt, cash advances will increase your credit utilization ratio, which represents how much of your available credit you are using.
Your credit score may be negatively affected by a high credit utilization ratio, especially when it exceeds 30%.
- No grace period on cash advances: Cash advances charge interest as soon as you withdraw the money.
- Limit how much cash you can withdraw: Cash advances have a separate limit from your overall credit limit. This cash advance limit is typically lower than your credit limit, which means you may not be able to withdraw as much cash as you need.
For example, if your credit limit is $5,000, your cash advance limit might be only $2,000.
Given these factors, it's essential to explore alternative options for accessing cash that may be more cost effective and have a lesser impact on your credit score.
Alternatives to Credit Card Cash Advances
Use a debit card
Using a debit card to withdraw cash from your checking or savings account is usually a more affordable option than a cash advance. There are no interest charges, and fees are generally lower, if applicable at all.
Credit card promotional checks
During a certain promotional period, some credit card issuers may offer promotional checks with a lower interest rate than cash advances, which can also be used to withdraw cash from your credit card. However, be careful to check the associated fees when using promotional checks.
Peer-to-peer payment apps
Consider using peer-to-peer payment apps like Venmo, Zelle, or Cash App to borrow money from friends or family. These apps typically have no or low fees, and you can repay the borrowed amount without incurring interest charges.
A margin loan from your brokerage account
A margin loan is a type of loan that uses your investments as collateral, with a lower interest rate than credit card cash advances. You can apply for a margin loan with a brokerage account with investments, but be mindful that it could pose a potential risk to your investments in case of default.
Consider applying for an unsecured personal loan
Unsecured personal loans typically have lower interest rates than credit card cash advances and may offer fixed repayment terms. Check with your bank or credit union to see if you qualify for a personal loan.
Home equity loan
If you are a homeowner, you may utilize your home equity to apply for a home equity loan or home equity line of credit (HELOC). These loans usually come with lower interest rates than cash advances, but pay attention to the risk of property loss if you default on your payment.
Withdrawing money from an IRA or taking a 401(k) withdrawal or loan
You might be allowed to take a loan out of your 401(k) plan or withdraw money from an Individual Retirement Account (IRA) or 401(k). However, this could potentially pose a negative impact on your retirement assets, so be wary of the possible taxes, fines, and long-term effects and proceed with caution.
When Cash Advances Don't Involve Cash?
Credit card cash advances don't necessarily require physical cash withdrawal. In some cases, credit card issuers may allow you to take non-cash advances through exchanges like wire transfers, money orders, and foreign currency purchases.
However, it's important to notice that such transfers may be regarded as cash advances by your credit card company, resulting in additional fees and higher interest rates.
Can you get cash from a store credit card?
Store credit cards are typically designed for use at specific retailers or retail chains, offering rewards and discounts for purchases made at those establishments. While some store credit cards function like traditional credit cards and can be used at other merchants, many are limited to the specific retailer associated with the card.
Most store credit cards do not offer cash advances because doing so would not directly benefit the retailer, who has the main goal of promoting sales in the specific store or chain of stores. However, under specified terms and conditions, some store credit cards might offer cash advances as an option.
To determine if your store credit card allows cash advances, review the cardholder agreement or contact the card issuer's customer service. Keep in mind that if your store credit card does offer cash advances, the transaction will likely come with fees and higher interest rates, similar to traditional credit card cash advances.
Withdrawing cash from a credit card is possible but generally not recommended due to high fees and interest rates. Although various methods exist to access cash, they can impact your credit score and financial health.
It's crucial to explore cost-effective alternatives before resorting to credit card cash advances to make well-informed financial decisions.
Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own.