Can You Withdraw Money From a Credit Card at an ATM?

A credit card cash advance allows you to borrow money directly against your credit card’s available credit limit. This functions as a short-term loan provided by your credit card issuer.

The Cash Advance Process

Obtaining a cash advance from an ATM using your credit card involves a straightforward series of steps. You will insert your credit card into the ATM, similar to how you would use a debit card. The machine will then prompt you to enter your Personal Identification Number (PIN). If you do not have a PIN for your credit card, you will need to request one from your card issuer before attempting a cash advance. This process may take several business days, so plan accordingly.

After entering your PIN, you will select the “cash withdrawal” or “cash advance” option from the ATM’s menu. Some ATMs may also ask you to choose between “checking,” “debit,” or “credit,” where you should select the “credit” option. You will then enter the specific amount of cash you wish to withdraw, keeping in mind that ATMs often dispense cash in specific increments. Before completing the transaction, the ATM may display information about associated fees, requiring your acceptance to proceed. Once confirmed, the cash will be dispensed, and you should collect your funds, card, and receipt promptly.

Financial Implications of Cash Advances

Cash advances come with distinct financial consequences that make them an expensive way to access funds. A transaction fee is typically applied immediately, often calculated as a percentage of the withdrawn amount, such as 3% to 5%, or a flat fee like $10, whichever is greater. For example, a $100 cash advance could incur a $10 fee if the flat fee is higher than the percentage.

Interest on cash advances begins accruing from the transaction date, unlike typical credit card purchases which often have a grace period before interest charges apply. This means there is no interest-free period for cash advances, so the borrowed amount starts accumulating interest right away. The Annual Percentage Rate (APR) for cash advances is generally higher than the APR for standard purchases. The average cash advance APR can be around 24.80%, while average purchase APRs might be closer to 19.84%. This significant difference highlights the added cost.

These combined fees and immediate, higher interest rates can quickly make a cash advance a costly borrowing option. Therefore, cash advances are generally not recommended for routine expenses or long-term borrowing needs.

Key Differences from Debit Card Withdrawals

Withdrawing money using a credit card cash advance differs significantly from a debit card transaction. A debit card withdrawal accesses your own funds directly from your linked bank account. This typically incurs no interest charges, though you might encounter an ATM fee if you use a machine outside your bank’s network.

In contrast, a credit card cash advance is borrowing money from your credit card issuer, adding to your credit card balance. This borrowed amount is subject to immediate interest accumulation and specific cash advance fees, functioning as a loan against your credit line. Using a cash advance also increases your credit utilization ratio, which measures the amount of credit you are using compared to your total available credit. A higher utilization ratio, especially above 30%, can negatively impact your credit score, as it signals increased debt to credit bureaus. Maintaining a low credit utilization is important for a healthy credit profile.

Understanding Cash Advance Limits

Credit cards typically impose a separate cash advance limit that is distinct from your overall credit limit for purchases. This cash advance limit is generally lower, often representing a percentage of your total credit limit, such as 10% to 40%. For example, a card with a $7,000 credit limit might have a cash advance limit of only a few hundred dollars.

Beyond the overall cash advance limit, there can also be daily ATM withdrawal limits, which may range from $300 to $1,000, depending on the ATM network or your card issuer’s policies. Attempting to withdraw an amount exceeding either your specific cash advance limit or the daily ATM limit will result in a denied transaction. It is advisable to know these limits beforehand to avoid inconvenience. You can typically find your specific cash advance limit by reviewing your credit card statement, accessing your online account, or contacting your credit card’s customer service directly.