Can You Take Cash Out of an ATM With a Credit Card?

Credit cards can be used at an ATM to obtain cash, a transaction known as a cash advance. While this offers immediate access to funds, it comes with specific conditions and costs that differ significantly from typical credit card purchases. Understanding these aspects is important for anyone considering this option.

Understanding Cash Advances

A cash advance is essentially a short-term loan taken against your credit card’s available credit limit. Unlike a standard credit card purchase, where the card issuer pays a merchant for goods or services, a cash advance provides you with physical currency.

To obtain a cash advance from an ATM, a Personal Identification Number (PIN) linked to your credit card is generally required. This PIN functions similarly to a debit card PIN, verifying your identity and authorizing the withdrawal from your credit line. The PIN adds a layer of security, ensuring only the authorized cardholder can access cash at an ATM.

Steps to Obtain a Cash Advance

First, insert your credit card into the ATM as you would a debit card. You will then be prompted to enter your credit card’s PIN. After successful PIN verification, select the option for a cash advance or withdrawal.

Next, input the desired cash amount, keeping in mind any daily withdrawal limits imposed by the ATM or your card issuer. The ATM will dispense the cash, and you should remember to retrieve your card and the transaction receipt.

Financial Implications of a Cash Advance

Cash advances carry distinct financial costs that make them an expensive form of borrowing. A cash advance fee is typically charged, which is often a percentage of the transaction amount, commonly ranging from 3% to 5%, or a flat minimum fee, such as $10, whichever is greater. This fee is applied immediately when the advance is taken.

Interest on cash advances begins accruing immediately from the transaction date, without the grace period usually extended to credit card purchases. This means interest starts accumulating on the borrowed amount from day one until the balance is paid in full. The Annual Percentage Rate (APR) for cash advances is also typically higher than the APR for standard purchases. While purchase APRs might have a grace period before interest applies, cash advance APRs are applied instantly and can be several percentage points higher.

Limits and Other Considerations

Credit card issuers and ATM operators often impose limits on cash advances. There is usually an overall cash advance limit set by the card issuer, which is a portion of your total credit limit. Additionally, ATMs may have their own daily withdrawal limits, often ranging from $300 to $1,000, which can further restrict the amount of cash you can obtain in a single transaction or day.

Taking a cash advance immediately reduces your available credit on the card. This reduction impacts your credit utilization ratio, which is the amount of credit you are using compared to your total available credit. A higher utilization ratio can potentially affect your credit score. Furthermore, cash advances typically do not earn rewards points, cash back, or other benefits commonly associated with credit card purchases.