Can I Withdraw Money From an ATM With a Credit Card?

A cash advance allows you to withdraw money from an Automated Teller Machine (ATM) using your credit card. While it provides immediate access to funds, this type of transaction differs significantly from a standard debit card withdrawal, which accesses your own bank account funds. It is also treated distinctly from typical credit card purchases, which involve buying goods or services.

Understanding Cash Advances

A cash advance is a short-term loan provided by your credit card issuer, where you borrow directly against your available credit limit. Unlike a debit card, a cash advance utilizes your credit line, meaning you access borrowed funds rather than your own deposited money. Credit card companies categorize cash advances as a separate type of transaction compared to regular purchases.

When you make a standard credit card purchase, you typically receive a grace period, allowing you to pay off the balance by the due date without incurring interest. A cash advance functions more like a direct cash loan, drawing from the credit limit established with your card issuer. The terms and conditions applied to cash advances are less favorable than those for purchases. The amount you can withdraw as a cash advance is capped at a specific percentage of your overall credit limit, which may be lower than your total available credit for purchases.

Process for Obtaining a Cash Advance

To obtain a cash advance at an ATM, insert your credit card into the machine. You will then be prompted to enter your Personal Identification Number (PIN). Many credit cards require a specific PIN for cash advances, which may not be the same PIN used for purchases or may need to be requested from your card issuer. After entering your PIN, select the “cash withdrawal” or “cash advance” option from the ATM menu.

Input the desired amount of cash, ensuring it is within your card’s cash advance limit and any daily ATM limits. The ATM may display a summary of potential fees associated with the transaction. Once confirmed, the cash will be dispensed. An alternative method for obtaining a cash advance is visiting a bank branch that displays your credit card’s network logo. At the bank, you can request a cash advance from a teller by presenting your credit card and a valid form of identification.

Financial Implications of Cash Advances

Cash advances come with distinct financial implications that make them more expensive than standard credit card purchases. A common cost is an upfront transaction fee, which is a percentage of the amount withdrawn, often ranging from 3% to 5%, or a flat fee, such as $10, whichever amount is greater. For instance, a $200 cash advance with a 5% fee would incur a $10 charge immediately. This fee is applied at the time of the transaction.

A significant difference from regular purchases is that interest on cash advances begins accruing immediately from the transaction date, without any grace period. This means that even if you pay your credit card balance in full by the due date, you will still owe interest on the cash advance from the moment you took it out. The Annual Percentage Rate (APR) applied to cash advances is also higher than the APR for purchases.

Taking a cash advance can impact your credit score. While the act of taking a cash advance itself is not directly reported as a negative event to credit bureaus, it increases your credit utilization ratio. This ratio measures the amount of revolving credit you are using compared to your total available credit, and a high utilization ratio can negatively affect your credit score. The combination of higher fees, immediate interest accrual, and potential credit score impact makes cash advances a costly way to access funds.