Can You Get Cash From an ATM With a Credit Card?

Using a credit card to obtain cash from an Automated Teller Machine (ATM) is a financial transaction known as a cash advance. This process allows cardholders to borrow cash directly against their credit limit, providing quick liquidity.

How a Credit Card Cash Advance Works

Obtaining a cash advance from an ATM with a credit card is a straightforward process. The primary requirement is a Personal Identification Number (PIN) associated with your credit card. If a PIN has not been set up, cardholders can request one online, via a mobile banking application, or by calling customer service.

Once the PIN is established, the process at an ATM mirrors a debit card withdrawal. Insert the credit card, enter the PIN, and select the “cash withdrawal” or “cash advance” option. After entering the desired amount, the transaction is completed, and the cash is dispensed.

A cash advance is essentially borrowing cash against your available credit limit, similar to a loan. Credit card issuers impose specific limits on cash advances. This cash advance limit is usually a subset of the overall credit limit, often ranging from 20% to 50% of the total available credit. Daily withdrawal limits may also apply.

Understanding the Costs

A credit card cash advance comes with notable costs that make it a more expensive way to access funds compared to typical purchases. Unlike standard credit card purchases, cash advances generally do not have a grace period, meaning interest begins to accrue immediately from the transaction date. This means interest charges start accumulating as soon as the cash is withdrawn, even if the cardholder plans to repay the amount quickly.

In addition to immediate interest accrual, cash advances incur a transaction fee. This fee is typically structured as a percentage of the advanced amount, commonly ranging from 3% to 5%, or a flat fee, such as $5 or $10, whichever is greater. For example, a $200 cash advance with a 5% fee would incur a $10 charge. This fee is added to the balance immediately, and interest then accrues on the total amount, including the fee.

The Annual Percentage Rate (APR) for cash advances is almost always higher than the APR for standard purchases on the same credit card. While purchase APRs might be around 20%, cash advance APRs can be notably higher, sometimes approaching 30% or more. This higher interest rate, combined with the immediate accrual, significantly increases the cost of borrowing. A cash advance also impacts the credit utilization ratio, which is the amount of credit used compared to the total available credit. A large cash advance can increase this ratio, as it adds to the outstanding balance, potentially influencing the credit score.

Alternatives to a Cash Advance

Given the high costs associated with credit card cash advances, exploring alternative methods for obtaining cash is often a more financially prudent approach. One common and cost-effective option is to use a debit card to withdraw funds directly from a checking or savings account at an ATM. This typically avoids transaction fees if using an in-network ATM, and no interest is charged as it is your own money.

For larger financial needs, a personal loan from a bank, credit union, or online lender can be a more suitable alternative. Personal loans generally offer lower interest rates compared to cash advances and come with fixed repayment schedules, making them more predictable. While personal loans involve an application and credit check process, they provide a structured borrowing solution without the immediate, high costs of a cash advance.

Another practical alternative involves utilizing the credit card for direct purchases whenever possible, rather than converting credit to cash. Many merchants accept credit card payments, eliminating the need for physical cash and allowing cardholders to potentially benefit from grace periods on purchases. In situations where immediate cash is needed, borrowing from friends or family can be a no-cost option, though clear repayment terms should be established. Additionally, some employers may offer salary advances, providing access to earned wages before the regular payday without incurring interest or fees. Building an emergency fund, a dedicated cash reserve for unexpected expenses, offers the most financially secure solution, eliminating the need for borrowing in urgent situations.