If you are looking for ways to get quick cash, you may be wondering if you can withdraw money from a credit card. The short answer is yes, but before you head to the nearest ATM, let me walk you through what that really means, the right way to do it, and the downside of withdrawing money from a credit card.
Withdrawing cash from a credit card is referred to as a cash advance, and while it may sound convenient, it comes with some serious drawbacks. High fees, steep interest rates, and no grace period can turn a quick fix into long-term debt if you’re not careful.
In this post, I will break down how cash advances work, where you can withdraw cash from a credit card, and most importantly, whether it’s the right move for your situation.
What is a cash advance?
Yes, you can withdraw money from a credit card through a cash advance, either at an ATM or over the counter. So, a cash advance is a quick way to access cash by borrowing against your credit limit.
Most banks and credit card providers offer this service, even at locations such as grocery stores or shopping malls. While you can withdraw money from a credit card, it is not recommended, as cash advances often come with high fees and interest with no grace period. In other words, after withdrawing money, the interest starts accruing immediately and is compounded daily.
Can I withdraw money from a credit card?
Yes, most credit card issuers allow you to withdraw money from a credit card at an ATM. However, keep in mind that this is considered a cash advance, which means you are taking out a short-term loan against your credit limit.
Credit card companies usually set a lower cash advance limit, often just a few hundred dollars. For example, your card issuer might allow you to withdraw up to $300 on a $2,000 credit limit. This helps prevent overspending and limits the impact of the high interest rates (APR) that kick in immediately after the transaction.
Before you head to the ATM, check your card’s terms to confirm it supports cash advances and understand the fees involved.
Should I withdraw money from my credit card?
If you’re thinking about withdrawing money from a credit card, here’s the truth: it’s almost never a good idea.
Yes, you can get a cash advance at an ATM or bank, but it comes with serious downsides:
- Cash advance APR: You will pay a much higher interest rate than for regular purchases. For example, cash advance APR can be as high as 27%, compared to 18%–25% for standard transactions.
- Cash advance fee: Most providers charge either $10 or 5% of the amount you withdraw, whichever is greater. So withdrawing $30 costs $10, while $400 costs $20.
- Bank and ATM fees: You may also get hit with extra fees just for using the ATM, especially if it is not your bank’s ATM.
- Low withdrawal limits: Even with a high credit limit, cash advance limits are usually capped at a few hundred dollars. Lenders do this to protect themselves and you from racking up high-interest debt.
- No grace period: Unlike regular purchases, interest on a cash advance starts accruing immediately.
- Credit score impact: Withdrawing cash increases your credit utilization and can lower your credit score if not repaid promptly.
- Lender perception: Frequent cash advances can make you look financially unstable, which may affect future lending decisions.
Where can I withdraw cash from a credit card?
If you find yourself in a situation where you need to withdraw money from a credit card, it is essential to understand your options and the associated costs. While it’s best to avoid cash advances due to high fees and interest, here are four common ways to access cash on your credit card.
- In person at your bank: You can request a cash advance directly from your bank.
- At an ATM: Most credit cards allow ATM withdrawals, but you will need a credit card PIN. The transaction will appear as a cash advance on your statement.
- Using a convenience check: These are special checks from your credit card provider. You can write one to yourself and deposit it.
- Over the counter at retailers: Some stores offer the option to get cash at the cashier’s desk when making a purchase with your credit card.
How to withdraw money from a credit card at an ATM?
Here is a step-by-step guide to withdrawing cash at an ATM with a credit card.
- Explore other options first. Before taking a cash advance, consider other options, such as borrowing from friends or postponing the purchase.
- Check if your card allows cash advances. Not all credit cards allow cash advances. Review your card’s terms or contact your issuer to confirm.
- Request or confirm your credit card PIN. You will need a PIN to use your credit card at an ATM. If you don’t have one, contact your card provider to set it up.
- Find a compatible ATM. Use an ATM that accepts your card’s network, such as Visa or Mastercard. Preferably, use one from your bank to avoid extra fees.
- Insert your card and enter your PIN. Just like with a debit card, follow the on-screen prompts.
- Select Cash Advance or Withdrawal. Select the cash advance option and enter the desired withdrawal amount. Keep in mind that there’s usually a limit, often a few hundred dollars.
- Review fees and confirm. You will likely see a warning about fees. These include: a cash advance fee, usually $10 or 5% of the amount, an ATM fee, and a high interest rate (APR starts immediately with no grace period).
- Take your cash and receipt. After the transaction, the amount will show up on your credit card statement as a cash advance.
Alternative to a cash advance
Withdrawing money from a credit card can be expensive and risky, but there are better ways to get the funds you need.
Here are two ways to get access to funds without a cash advance.
Apply for a personal loan
Personal loans typically offer more favorable terms than cash advances. With a personal loan, you will get:
- Lower interest rates
- Fixed monthly payments
- More flexible repayment options. If your credit score puts you in the Prime or Super-prime category, you may qualify for larger amounts at better rates.
Borrow from friends or family
If you are facing financial hardships, reaching out to someone you trust can help you avoid costly debt. Friends and family may be willing to help without charging interest or fees, and that’s a huge win compared to withdrawing money from a credit card.
