Can I Take Money Off My Credit Card?

Credit cards allow you to obtain physical cash, a process known as a cash advance. While credit cards are primarily for goods and services, they also offer ways to access funds in cash. Understanding these methods and their associated conditions is important for anyone considering such a transaction.

Understanding Credit Card Cash Advances

A credit card cash advance is a short-term loan from your credit card issuer, allowing you to withdraw cash directly from your credit line. Unlike a typical credit card purchase, which involves exchanging funds for goods or services, a cash advance immediately converts a portion of your available credit into spendable currency. This transaction differs because it does not involve a merchant.

People often consider a cash advance when they need immediate physical money, such as when card payments are not accepted or during an unexpected financial shortfall. For example, it might cover services that only accept cash or an emergency expense.

Financial Characteristics of Cash Advances

Cash advances incur costs that distinguish them from regular credit card purchases. A cash advance fee is charged at the time of the transaction. This fee is either a flat amount, such as $5 or $10, or a percentage of the advanced amount, ranging from 3% to 5%, whichever is greater. For example, a $100 cash advance could incur a $5 fee, meaning you receive $95.

The interest rate applied to cash advances is another financial characteristic. These rates are higher than the Annual Percentage Rate (APR) for standard purchases, sometimes exceeding purchase APRs by several percentage points. This higher interest rate contributes to the overall cost of borrowing cash. The average cash advance APR can be around 24.80%, compared to an average purchase APR of about 19.84%.

A grace period, which allows a period before interest accrues on purchases, does not apply to cash advances. Interest begins to accumulate from the moment the cash advance is taken, meaning there is no interest-free period. This immediate accrual of interest means the total cost of the advance increases instantly, even if the balance is paid off quickly.

A cash advance immediately reduces your available credit limit by the amount of the advance plus any associated fees. This reduction can impact your ability to make other purchases or access credit if your limit is near its maximum. The outstanding cash advance balance will also be reflected on your credit report, which can influence your credit utilization ratio. A high credit utilization ratio, often above 30%, can negatively affect your credit score.

Methods for Obtaining a Cash Advance

You can obtain a cash advance through an automated teller machine (ATM). To use an ATM, you need your credit card and a personal identification number (PIN). Select the cash advance option and enter the desired amount, similar to a debit card withdrawal. The ATM may also have a limit on how much you can withdraw in a single day.

Another method is visiting a bank branch and requesting a cash advance directly from a teller. This process requires presenting your credit card and a valid form of identification, such as a driver’s license. The teller will then process the transaction, providing you with the requested cash from your available credit limit.

Credit card issuers may also provide convenience checks, which are linked to your credit card account. These checks allow you to write against your available credit line, similar to a regular check, but the amount drawn is treated as a cash advance. When the check is cashed or deposited, the funds are debited from your credit card account as a cash advance. Some card issuers also offer direct deposit options, transferring funds electronically from your credit line to a linked bank account, which is also treated as a cash advance.