Can You Get Cash Back With a Credit Card?

It is possible to obtain cash back with a credit card, though the process and implications differ significantly from receiving cash back with a debit card. This article explains how these transactions function and outlines important considerations to be aware of before proceeding.

Understanding Credit Card Cash Back

When you receive cash back through a credit card, it is generally treated as a cash advance by the card issuer. This means you are essentially borrowing money against your available credit line rather than accessing your own deposited funds. Unlike a debit card withdrawal, which directly deducts money from your bank account, a credit card cash advance adds to your outstanding credit card balance.

A cash advance is a loan provided by your credit card issuer, allowing you to access immediate cash. The amount borrowed is then added to your credit card statement, just like any other purchase. This type of transaction is separate from typical cash back rewards programs, which provide a percentage of spending back to the cardholder.

How to Obtain Cash Back at Merchants

Obtaining cash at a merchant’s point-of-sale (POS) terminal using a credit card is typically processed as a cash advance. While many retailers offer cash back with debit card purchases, using a credit card for this purpose triggers a different type of transaction. To initiate this, you would generally swipe or insert your credit card at the terminal during a purchase.

The process often involves selecting “credit” for the transaction, even if you are also requesting cash. You would then specify the desired cash back amount, which the merchant’s system processes alongside your purchase. Confirming the transaction finalizes the process, and the cash is dispensed by the merchant.

Key Considerations and Potential Costs

Cash back obtained via a credit card incurs immediate costs. A cash advance fee is typically charged, ranging from 3% to 5% of the transaction amount, or a flat fee such as $10, whichever is greater. For example, withdrawing $100 could result in a $5 fee, adding to the total amount owed. These fees are applied as soon as the transaction occurs.

Interest on cash advances begins accruing immediately from the transaction date, without any grace period. This differs from standard credit card purchases, which often have a grace period before interest charges apply. The annual percentage rate (APR) for cash advances is also typically higher than the APR for regular purchases, often ranging from 24.99% to 29.99% or more.

There are also limits on the amount of cash back you can obtain. Credit card issuers set a cash advance limit, which is typically a percentage of your overall credit limit, often ranging from 20% to 50%. Merchants may also impose their own daily or per-transaction limits on cash dispensed. Understanding these limits is crucial to avoid unexpected denials when seeking cash.

Obtaining a cash advance impacts your credit utilization ratio, which is the amount of credit you are using compared to your total available credit. A cash advance increases your outstanding balance, which can elevate this ratio. If your credit utilization rises significantly, particularly above 30% of your available credit, it can potentially affect your credit score. Paying off the cash advance quickly helps mitigate this impact and demonstrates responsible credit management.