You can typically use your credit card to withdraw cash. This process is known as a “cash advance” and has its own set of rules for withdrawal and repayment.
Let’s learn a bit more about cash advances, including how they work and how to get one.
What is a cash advance on a credit card?
A cash advance is when you use your credit card to withdraw cash. You can usually do this through an ATM or participating bank.
Cash advances typically have a limit that’s based on your regular credit limit. Your cash advance limit is usually a percentage of your regular credit limit.
Credit card companies typically start charging interest on a cash advance as soon as you make the withdrawal. The interest rate is normally a separate cash advance APR, which is different from other APRs, like your purchase APR or balance transfer APR. It’s also usually higher than your purchase APR.
Rates and fees associated with credit card cash advances
There are generally 2 types of fees associated with cash advances:
- Transaction fee (sometimes called a cash advance fee): Some cards charge a flat fee for each cash advance. Others might charge a percentage of the cash advance, or a percentage with a minimum (for example, 5% or $15, whichever is greater).
- ATM fees: If you use an ATM to get a cash advance, the bank or ATM owner may also charge a separate fee. In addition to fees, you will also be charged interest on your cash advance. Typically, interest starts accruing immediately on cash advances (unlike with purchases, there’s no grace period). The interest rate for cash advances is often higher than the interest rate for purchases.
How to get cash from a credit card
Here’s how to take out a cash advance:
Find out your card’s cash advance limit
You can typically find this on your most recent statement. You can also call your card issuer or check your online account.
Read the terms of your agreement
Look at your credit card’s terms and conditions to see what the rules are regarding cash advances. Find out what the APR and fees will be.
Withdraw money from an ATM
You can get a cash advance at an ATM. You’ll insert your card, and, as with a debit card, you’ll need your credit card’s PIN. Then, you’ll follow the prompts on the screen. You’ll likely select an option like “cash advance” or “cash withdrawal” and choose how much you’d like to borrow. You may be asked to acknowledge fees associated with the transaction before getting your cash.
Go to a bank to withdraw money
You can also use your credit card to withdraw cash at a bank. You may have to show identification. If you choose to get a cash advance at a bank, ensure it’s a bank that can issue a cash advance for your credit card.
What to consider before taking out a cash advance
As with any transaction, you’ll want to understand the terms and conditions beforehand. Check your card’s associated fees, interest rates and other conditions for cash advances.
Interest rates
The APR for credit card cash advances is usually higher than your credit card’s purchase APR.
No grace period
Cash advances typically don’t have a grace period for interest charges. This means that you’ll start accruing interest on your cash advance as soon as you make the transaction.
No rewards
You typically don’t earn rewards on cash advances, as they are not considered purchases. This means you will not earn points, miles or cash back for cash advances.
Alternatives to taking a cash advance
There are other ways to get cash if you need it. Before you take a cash advance, consider these alternatives:
- Make purchases with your credit card: If you don't need cash to make a purchase, use your credit card instead. Typically, the interest rate on purchases is lower than the interest rate on cash advances. Plus, you will avoid paying a cash advance fee.
- Look into personal loans: A personal loan may provide you with the cash you need and cost less in fees and interest than a cash advance.
- Borrow from someone: Consider borrowing money from a family member or friend.
- Tap into savings: Withdraw money from your savings account or emergency fund, if possible.
If you find yourself in a situation where you need cash but don’t have immediate access to it, a credit card cash advance can be a helpful solution. To keep interest charges to a minimum, try to pay your cash advance off as quickly as possible.
