Can You Get Money Out of an ATM With a Credit Card?
Understand the mechanics and critical financial considerations of obtaining cash through an ATM with your credit card.
It is possible to obtain money from an Automated Teller Machine (ATM) using a credit card. This transaction is specifically identified as a cash advance. While this option provides immediate access to funds, it carries distinct financial implications that warrant careful consideration.
Understanding Credit Card Cash Advances
A credit card cash advance represents a loan of cash from your credit card issuer, distinct from a standard credit card purchase. It provides physical currency by drawing against your credit line.
A Personal Identification Number (PIN) is required to complete a cash advance at an ATM. This PIN verifies your identity as the cardholder. If you do not have a PIN or have forgotten it, contact your card issuer to request one. The issuer can provide a new PIN, though it may take several days to arrive.
How to Obtain a Cash Advance at an ATM
Once you have your credit card and PIN, obtaining a cash advance at an ATM follows a straightforward procedure. Insert your credit card into a compatible ATM. You will be prompted to enter your personal identification number.
After successful PIN entry, navigate the ATM menu to find options such as “Cash Advance” or “Withdrawal from Credit.” Specify the desired cash amount, adhering to any daily ATM withdrawal limits or your card’s cash advance limit. The ATM will display a summary, including any associated fees, for your acceptance before dispensing the cash and a receipt.
Key Financial Considerations
Credit card cash advances incur specific financial costs that differ from regular credit card purchases. A cash advance fee, typically 3% to 5% of the advanced amount, with a minimum of $5 or $10, is a primary expense.
A significant distinction for cash advances is the immediate accrual of interest. Unlike purchases, which may have a grace period, interest on a cash advance starts accumulating from the transaction date. The Annual Percentage Rate (APR) for cash advances is higher than for standard purchases, often reaching 25% to 36% or more. This higher, immediately accruing interest makes a cash advance an expensive way to borrow money.
Impact on Your Credit and Future Finances
Taking a cash advance can influence your credit profile and overall financial health. The advanced amount increases your credit card balance, which raises your credit utilization ratio.
This ratio, representing the amount of credit used compared to total available credit, is a key factor in credit scoring. A high credit utilization ratio, typically above 30%, can negatively affect your credit score by signaling increased financial risk to lenders.
While a cash advance itself is not directly reported as a negative event, the resulting higher balance and potential for increased debt can impact your score. This elevated risk perception by lenders might influence future borrowing opportunities or the interest rates offered on other credit products. Prompt repayment mitigates these potential long-term effects.