Can I Get Cash From an ATM With a Credit Card?
Understand if your credit card can get cash from an ATM, the significant costs involved, and safer ways to access funds when you need them.
It is possible to obtain cash from an Automated Teller Machine (ATM) using a credit card, a transaction known as a cash advance. This method allows access to funds from your credit card’s available credit limit, similar to taking out a loan. While it offers immediate liquidity, a cash advance comes with significant financial implications, making it a costly borrowing option.
Accessing Cash Through an ATM
Obtaining a cash advance from an ATM requires a Personal Identification Number (PIN). If you do not have a PIN, request one from your card issuer before attempting a cash advance. The process involves inserting your credit card, entering your PIN, and selecting the “cash advance” or “withdrawal” option.
You will then enter the desired cash amount. Credit card companies often set a specific cash advance limit, which is typically a percentage of your overall credit limit and lower than your purchase limit. ATMs may also have their own daily withdrawal limits, and not all ATMs support credit card cash advances. After confirming the transaction and accepting any displayed fees, the ATM dispenses the cash.
Costs and Financial Implications
Cash advances are an expensive way to borrow money due to several costs. A cash advance fee is charged per transaction, often a percentage of the amount withdrawn (3% to 5%) or a flat fee ($5 to $10), whichever is greater. For example, a $1,000 cash advance could incur a fee of $30 to $50.
Another significant cost is the Annual Percentage Rate (APR) applied to cash advances. This interest rate is almost always higher than the APR for standard credit card purchases, often ranging from 25% to 30% or more. Interest on a cash advance begins accruing immediately from the transaction date, with no grace period, unlike many credit card purchases. This means the cost of borrowing builds up from day one until the balance is fully repaid.
Taking a cash advance can impact your credit utilization ratio (the amount of credit used versus total available credit). A large cash advance increases your outstanding balance, potentially raising this ratio. If your credit utilization becomes too high, generally above 30%, it can negatively affect your credit score. Even minimum payments may not quickly reduce the cash advance balance due to its higher interest rate, as payments above the minimum are often applied to the highest interest rate balance first.
Alternative Options for Accessing Funds
Given the substantial costs associated with credit card cash advances, exploring alternative methods for accessing funds is often more financially prudent. The most straightforward and cost-effective option for immediate cash is typically using a debit card to withdraw money directly from a checking account. This uses your own funds and generally avoids interest charges, though ATM fees from non-network machines may still apply.
Maintaining an emergency fund is a sound financial practice, providing a readily available source of cash for unexpected needs without incurring debt. For larger or planned expenses, a personal loan from a bank or credit union can be a more affordable choice. Personal loans often feature lower interest rates and a fixed repayment schedule, though they involve an application process and a credit check.
Borrowing money from friends or family can be an interest-free solution for short-term needs, provided clear repayment terms are established to avoid strain on relationships. Some employers offer payroll advances or earned wage access programs, allowing employees to receive a portion of their earned wages before their scheduled payday, often with minimal or no fees. While not for immediate cash, some credit card issuers offer loan programs that allow borrowing against a credit limit at a fixed interest rate, which can be less expensive than a traditional cash advance.