How to Get Cash From a Credit Card: What to Know

A credit card cash advance provides immediate cash by borrowing directly from your credit card’s available credit limit. Unlike a debit card, which accesses your own funds, a cash advance functions as a loan against your credit line. Understanding the methods to acquire cash from a credit card is important before considering such a transaction.

Methods for Obtaining Cash Advances

One common method for obtaining a cash advance is through an Automated Teller Machine (ATM). You will need your physical credit card and a Personal Identification Number (PIN) from your card issuer. After inserting your card and entering your PIN, select a “cash withdrawal” or “cash advance” option and specify the desired amount. ATMs often have daily withdrawal limits, and you must confirm acceptance of any associated fees before the transaction is completed.

Another way to get a cash advance is by visiting a bank teller in person. This requires presenting your credit card along with a government-issued photo identification. The bank teller can process the cash advance directly if the bank is affiliated with your credit card’s network. This method is useful if you do not have a PIN or need a larger sum than an ATM allows.

Credit card companies may also issue convenience checks, which are blank checks linked to your credit card account. These allow you to write a check against your available credit line. If you write a convenience check to yourself, you can cash or deposit it at your financial institution to access the funds. These checks are processed as cash advances and are subject to the same terms and fees as other cash advance methods.

Some credit card issuers also offer the option to transfer a cash advance directly to your bank account. This can be initiated over the phone or through online banking platforms. These direct deposits are categorized as cash advances and are subject to the same fees and interest rates. Confirm with your card issuer if this option is available and understand its specific terms.

Costs and Interest Rates

Cash advances come with distinct costs, making them an expensive way to borrow money. The cash advance fee is typically charged immediately upon the transaction. This fee is often a percentage of the advanced amount (e.g., 3% to 5%) or a flat fee (e.g., $10), whichever is greater. For example, a $1,000 cash advance with a 5% fee would incur an immediate $50 charge.

Cash advances are subject to a higher Annual Percentage Rate (APR) compared to standard credit card purchases. This cash advance APR often significantly exceeds the typical purchase APR on the same card. The higher interest rate means the borrowed amount will accumulate interest more quickly, increasing the total cost of the advance.

Cash advances have no grace period for interest accrual. Unlike credit card purchases, where interest may be avoided by paying the balance in full by the due date, interest on a cash advance begins accruing immediately from the transaction date. This means you will owe interest for the days the money was borrowed, even if paid off quickly. Interest charges compound daily until the full amount, including fees, is repaid.

In addition to fees and interest from your credit card issuer, you may also encounter separate fees from the ATM operator. These third-party ATM fees typically range from $2 to $5 per transaction. These additional charges further increase the overall cost of obtaining cash. It is important to consider all these cumulative costs before deciding on a cash advance.

Impact on Your Credit

Taking a cash advance can influence your credit health, primarily through its effect on your credit utilization ratio. This ratio represents the amount of revolving credit you are using compared to your total available credit. A cash advance immediately increases your outstanding credit card balance, which can elevate your credit utilization. Maintaining a credit utilization ratio below 30% is advised, as exceeding this threshold can negatively impact your credit score.

The increased balance from a cash advance places greater importance on consistent, timely payments. Payment history is a significant factor in credit scoring. Failing to make minimum payments on time, especially with a higher outstanding balance, can lead to negative marks on your credit report. This can reduce your credit score and make it more challenging to obtain credit in the future.

Frequent reliance on cash advances might be viewed unfavorably by potential lenders. While a single cash advance does not directly lower your credit score, a pattern of taking them could signal financial distress. Lenders may interpret repeated cash advances as an indication that you are struggling to manage your finances. This could affect your ability to qualify for new loans or credit lines, or result in less favorable terms.