Can You Get Cash Back With a Credit Card?

A credit card enables cardholders to borrow funds up to a pre-approved limit for purchases, with repayment typically expected by a due date. The term “cash back” often refers to a reward where cardholders earn a small percentage of their spending back on eligible purchases.

Understanding Credit Card Cash Back

The phrase “cash back” can have two distinct meanings when associated with credit cards. Most commonly, it refers to cash back rewards programs. These programs allow cardholders to earn a percentage of their spending back, typically ranging from 1% to 5% on qualifying purchases. This earned amount is typically redeemed as a statement credit, direct deposit, gift cards, or other purchases through the card issuer’s portal.

The second meaning of “cash back” involves obtaining physical currency directly from a credit card. This is a separate financial transaction from rewards programs and comes with different rules, fees, and implications. Unlike rewards that are an incentive for spending, getting physical cash from a credit card is a form of borrowing.

Getting Cash at Point of Sale

Obtaining physical cash at a retail point of sale is generally less common with credit cards compared to debit cards. The typical scenario involves making a purchase and then requesting an additional amount of cash alongside the transaction. This added amount is then charged to the card.

While some merchants or specific card issuers, like Discover, may offer this service, it is not a standard feature across all credit cards or retailers. When available, the amount of cash that can be received is usually limited, for instance, up to $120 per 24 hours with certain Discover cards. Card issuers may categorize these transactions in ways that incur fees or interest.

Credit Card Cash Advances

A credit card cash advance allows you to borrow physical cash directly from your credit line. This is distinct from using your credit card for purchases, as it functions more like a short-term loan. There are several common methods for obtaining a cash advance.

Withdrawing cash from an ATM using your credit card and a Personal Identification Number (PIN).
Visiting a bank teller in person, presenting your credit card and a valid government-issued ID.
Using convenience checks provided by some credit card companies, which can be written out to yourself or another party and then cashed or deposited.

Cash advances typically have a specific limit, which is usually a subset of your overall credit limit, often ranging from 20% to 50% of the total available credit.

Costs and Financial Implications

Obtaining physical cash from a credit card, particularly through a cash advance, involves several financial considerations. Cash advances typically incur a fee, commonly ranging from 3% to 5% of the transaction amount, or a flat fee such as $5 to $10, whichever is greater.

Interest rates on cash advances are generally higher than those for regular purchases, often ranging from 25% to 30% or more. Unlike standard purchases that may offer a grace period before interest accrues, interest on cash advances begins immediately from the transaction date. This means even if you pay off the advance quickly, interest will still be charged for the days the money was borrowed.

Taking a cash advance can also impact your credit score. The transaction increases your credit card balance, which can raise your credit utilization ratio. A high utilization ratio, particularly above 30% of your available credit, can negatively affect your credit score. Furthermore, cash advances typically do not earn rewards points or cash back.