Can You Use Your Credit Card at an ATM?

A credit card cash advance allows you to withdraw cash directly from your credit card’s available credit limit. This functions as a short-term loan against your credit line, distinct from using a debit card, which accesses funds from your checking account. While it is possible to obtain a cash advance at an ATM, this method of accessing funds comes with specific considerations regarding fees and interest.

Accessing Cash with Your Credit Card

To get a cash advance from an ATM using your credit card, first locate an ATM that accepts your card’s network, indicated by logos on the machine. Insert your credit card into the reader.

The ATM will prompt you for your Personal Identification Number (PIN). This PIN is specific to your credit card for cash advances. If you do not have a cash advance PIN or have forgotten it, you must request one from your credit card issuer, which may take several days to receive via mail.

After entering your PIN, select “cash withdrawal” or “cash advance” from the menu. If prompted to choose between “checking,” “debit,” or “credit,” select “credit.” Then, enter the desired amount, noting that ATMs often dispense cash in specific increments, such as $20.

Daily ATM withdrawal limits may apply. These limits, along with your specific cash advance limit, determine the maximum amount you can withdraw. For instance, if your overall credit limit is $10,000, your cash advance limit might only be $2,000 or $3,000. This smaller limit is set by credit card issuers because cash advances are considered a riskier transaction compared to standard purchases. The amount you withdraw will be added to your credit card balance, just like any other purchase.

Understanding the Costs and Limits

Cash advances typically involve two primary costs: a cash advance fee and a higher interest rate. The cash advance fee is usually either a flat fee or a percentage of the amount withdrawn, whichever is greater. Common fees range from 3% to 5% of the transaction amount, or a flat fee such as $10.

For example, on a $300 cash advance with a 5% fee or $10 minimum, you would pay a $15 fee, in addition to any ATM operator fees. Unlike regular credit card purchases, cash advances generally do not have an interest-free grace period.

Interest on a cash advance begins accruing immediately from the transaction date. The Annual Percentage Rate (APR) for cash advances is almost always higher than the APR for standard purchases. While purchase APRs might range, cash advance APRs can often be several percentage points higher, sometimes nearing 30% or more. This higher interest rate compounds the cost significantly, especially if the balance is not repaid quickly.

The specific cash advance limit on your card is a predetermined amount, which is a portion of your overall credit limit. For example, a card with a $15,000 overall credit limit might have a cash advance limit capped at 30%, or $4,500. This limit is set by the card issuer and can be found on your monthly statement or by contacting the issuer directly. The cash advance limit is almost always lower than your total credit limit because card issuers view these transactions as indicating a higher risk of financial distress. Using a cash advance reduces your available credit for both purchases and future cash advances, impacting your overall borrowing capacity.

Implications for Your Credit

Using a cash advance can impact your credit score and financial standing, primarily through its effect on your credit utilization ratio. A cash advance immediately adds to your outstanding balance, increasing the amount of credit you are using. Credit utilization is a significant factor in credit scoring models.

This ratio compares your total outstanding credit card balances to your total available credit. A higher balance from a cash advance can push your credit utilization ratio upward. For instance, using a large portion of your available cash advance limit can cause your overall credit utilization to rise, which may lead to a temporary dip in your credit score.

Credit scores are generally optimized when credit utilization remains below 30% of your total available credit. Exceeding this threshold, even temporarily, can signal increased risk to lenders. The immediate interest accrual and higher APR associated with cash advances also contribute to a larger debt burden.

If this increased balance is not paid off promptly, it can lead to higher minimum payments, making it more challenging to manage your debt. Missed payments, a direct result of an unmanageable debt burden, can severely damage your credit history and score. The prolonged presence of a high balance due to a cash advance can negatively affect your credit profile over time.

Exploring Other Options for Cash

When you need cash, several alternatives may be less costly than a credit card cash advance:

• Use a debit card to withdraw funds directly from your checking account at an ATM. This accesses your own money, incurring only potential ATM fees, rather than borrowing funds at high interest rates.
• Consider direct payment with your credit card if the transaction typically requires cash. Many merchants accept credit cards for purchases, eliminating the need to withdraw physical cash and avoid cash advance fees and interest.
• Draw upon an emergency savings fund for larger, unexpected expenses to provide necessary funds without incurring debt.
• Explore a personal loan from a bank or credit union for significant cash needs not covered by savings. Personal loans generally offer lower interest rates than credit card cash advances and have fixed repayment terms.
• Ask your employer for a salary advance, allowing you to access a portion of your earned wages before your regular payday. This can be a fee-free way to cover immediate expenses.
• Check if your credit card issuer provides options like convenience checks or specific loan programs that allow access to funds at potentially more favorable terms than a traditional cash advance.