How to Turn Your Credit Card Into Cash

Credit cards are primarily for purchases, but individuals may need to access cash from their credit limit for unexpected expenses or to bridge a short-term financial gap. Converting a credit card limit into cash is possible through various methods, each with distinct financial implications.

Direct Cash Access Methods

One common way to obtain cash directly from a credit card is through a cash advance, a short-term loan against your credit line. This method typically incurs a transaction fee, often 3% to 5% of the advanced amount, or a minimum flat fee. Unlike standard purchases, cash advances do not offer a grace period, and interest begins to accrue immediately from the transaction date.

The Annual Percentage Rate (APR) for cash advances is generally higher than for regular credit card purchases, making them an expensive form of borrowing. The amount borrowed, along with fees and interest, is added to your credit card balance. The cash advance limit is typically a percentage of your overall credit limit, not the entire available credit line.

Another direct method involves credit card convenience checks, which are linked to your credit card account and allow you to write against your available credit limit. Their financial terms are similar to cash advances, including comparable fees and immediate interest accrual without a grace period.

Some credit card issuers also permit balance transfers directly to a bank account, converting a portion of your credit limit into cash. While less common for direct cash access than cash advances, this can be a strategic option. Balance transfers typically involve a fee, often 3% to 5% of the transferred amount. These transfers may offer promotional lower interest rates, or standard rates could apply.

Utilizing Third-Party Services

Third-party services offer indirect ways to convert credit card limits into cash, often involving additional fees. Peer-to-peer (P2P) payment applications like PayPal, Venmo, and Cash App allow users to send money using a linked credit card. When funding a payment with a credit card through these platforms, a fee, typically around 3%, is charged to the sender. For example, PayPal commonly charges around 2.9% to 3% plus a fixed fee, while Venmo and Cash App generally impose a 3% fee.

It is important to recognize that many credit card issuers classify P2P transactions funded by a credit card as cash advances. This can trigger additional cash advance fees and immediate interest accrual from the credit card company, compounding the P2P app’s costs. Once funds are in the P2P app’s balance, they can be transferred to a linked bank account. Standard transfers are usually free but take a few business days, while instant transfers incur an additional fee.

Instant transfers typically incur a fee, often ranging from 0.5% to 1.75% of the transfer amount, with specific minimums and maximums depending on the service. These fees are deducted from the amount being transferred.

Payment processors like Square and Stripe, designed for businesses to accept credit card payments, can also be adapted to access cash. A business owner might process a credit card payment to themselves for legitimate services or goods, then access the funds. This method requires a legitimate business setup and involves standard processing fees. For example, Square’s in-person processing fees are typically 2.6% plus $0.10 per transaction, while online transactions range from 2.9% plus $0.30. Stripe generally charges 2.9% plus $0.30 per transaction for online payments.

Completing the Transaction

To obtain a cash advance from your credit card, visit an ATM. You will need your credit card and Personal Identification Number (PIN). At the ATM, select the cash withdrawal option, specify the desired amount, and confirm the transaction. An ATM operator may impose its own fee in addition to your credit card issuer’s cash advance fee.

Alternatively, get a cash advance directly from a bank teller. This requires presenting your credit card and a government-issued identification. Inform the teller you wish to perform a credit card cash advance and state the amount. The funds will then be provided to you.

When using credit card convenience checks, fill out the check with the payee’s name and desired amount, similar to writing a personal check. These checks can then be cashed or deposited into your bank account. Ensure the check is filled out accurately to avoid processing delays.

For a balance transfer to a bank account, initiate this process through your credit card issuer’s online portal or by contacting customer service. You will need to provide your bank account and routing number for the transfer. The funds are then electronically transferred to your specified bank account, usually within a few business days.

If utilizing peer-to-peer payment apps, link your credit card to the chosen app. To send money, navigate to the send money feature, select your linked credit card as the funding source, enter the recipient’s details (which can be your own second account), and specify the amount. Once the money is in the app’s balance, transfer it to your linked bank account. Within the app’s withdrawal or cash-out section, choose your bank account and select either a standard transfer for no additional fee or an instant transfer for an immediate deposit, noting the associated instant transfer fee.