If your goal is getting cash from a credit card, your main option is taking out a cash advance. You can get a cash advance on a credit card with the help of any ATM, yet you can also use credit card convenience checks to get cash out.
Either way, you should know that there are additional charges and fees that come into play when you utilize your credit limit to get cash in hand. Unfortunately, these added finance charges can make each cash advance cost considerably more than people realize.
Before you take out a cash advance, you should know about the pros and cons of utilizing this strategy. In the meantime, you should learn about cash advance alternatives that can help you access the money you need.
Key Takeaways on How to Get Cash From a Credit Card:
The term “cash advance” is used to describe any time you use a credit card to get access to cash or cash alternatives. For example, the Consumer Financial Protection Bureau (CFPB) says a cash advance can include using a credit card to get cash from a bank, using a credit card to make a wire transfer, or using credit to buy travelers checks, money orders, or foreign currency.
That said, the most common methods of getting a cash advance involve using a credit card to get cash from an ATM or relying on credit card convenience checks.
In either case, the consumer gets access to cash, and the amount of their cash advance is deducted from the line of credit on their credit card. From there, they are required to repay the cash advance on their credit card just as if they had used their card to make a purchase. However, there are added fees involved in each cash advance transaction that takes place, which can make using a credit card this way an expensive proposition.
Generally speaking, you’ll need to have a PIN number for your credit card to get cash from an ATM. It’s possible your credit card issuer sent you a PIN when you received the paperwork for your new card. However, you may be able to set up a PIN for your credit card online or over the phone.
Once you have a PIN for your credit card, you can use it to get cash out of an ATM with the following steps:
The steps outlined above make getting a cash advance look as easy as pie, but you should know about the hidden challenges and risks associated with using a credit card to get cash out. The fact is, racking up a cash advance balance can lead to considerable interest charges that can get dramatically worse over time if you don’t pay your card off completely. Not only that, but each credit card cash withdrawal has extra fees attached.
What should you know before you treat your credit card like an ATM card? Consider the following:
Credit card issuers charge a cash advance APR on each cash advance balance that is higher than the APR for purchases. These added finance charges make taking cash out of an ATM an expensive habit to get into, and one you should probably avoid if you can help it.
Also be aware that each card issuer will charge an upfront cash advance fee each time you take out cash from your credit line. This fee typically tacks on 5% to each cash advance transaction, or $5 in fees for each $100 withdrawal.
You will also be charged an ATM fee to get cash back from an ATM, and the amount of these fees can vary widely.
Cash advances are not afforded the same repayment terms from the credit card company as you’ll get with regular charges to your card. In fact, you don’t get a grace period when you use a credit card to get a cash advance, so interest begins accruing on your cash advance balance right away.
Finally, you should know that increasing your credit card balance can have a considerable impact on your credit score and your overall creditworthiness. Generally speaking, you should strive to keep your credit card balance below 30% of your available credit for the best results.
If you are a cardmember who is hoping to get access to cash without having to drain your bank account or pay exorbitant fees for a cash advance, there are several alternatives to consider.
One option involves using your credit card to purchase a prepaid debit card. This strategy can help you access a card you can use for online and in-person charges without the added fees and charges of a cash advance.
If you go with this option, you should keep in mind that prepaid debit cards often come with added fees of their own. Also note that you could just as easily use your credit card for purchases, which also helps you avoid cash advance fees and as well as a cash advance APR on the money you access.
Several online payment apps let you transfer money to yourself (or to others) that is ultimately withdrawn from your credit line. Options include CashApp, PayPal, and Venmo to name a few.
Just remember that you’ll pay a transaction fee if you utilize this option. For example, Venmo charges a 3% fee to send money with a credit card and so does CashApp. In the meantime, PayPal charges a flat fee of $.30 plus 2.90% to send cash with a credit card.
Individuals who need to access cash can always reach out to family members or friends for help. That said, it’s smart to agree to a repayment plan in writing, and to borrow responsibly and repay every dollar owed.
Borrowers with good credit can also consider taking out a personal loan. These loans let consumers borrow the cash they need with fixed interest rates, fixed monthly payments, and fixed repayment schedules that will never change.