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 obtain one.
What is a cash advance on a credit card?
A cash advance is when you use your credit card to get 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.
It’s also important to note that credit card companies typically start charging interest on your cash advance as soon as you make the withdrawal. The interest rate is typically 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 three 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.
- Interest rates: Typically, interest starts accruing immediately on cash advances (there’s no grace period like the one you usually get with purchases). The interest rate for cash advances is often higher than the interest rate for purchases.
How to get cash from a credit card
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 and see what the rules are regarding cash advances.
Withdraw money from an ATM
Withdrawing a cash advance from a credit card at an ATM will require you to know the card’s corresponding PIN.
Go to a bank to withdraw money
You can also use your credit card at a bank to withdraw cash. You may have to show identification. If you choose a bank, you should make sure it’s a bank that can issue a cash advance for your credit card.
Things to consider before taking a cash advance
With a cash advance, as with any transaction, there are terms and conditions you’ll want to understand ahead of time. You’ll need to look at the associated fees, interest rates and other conditions that may affect you.
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 do not need cash to make a purchase, you could use your credit card to make the purchase instead. Typically, the interest rate on purchases is lower than the interest rate on cash advances.
- Look into personal loans. A personal loan may provide you with the cash you need and cost you less in fees and interest than a cash advance.
- Consider borrowing money from a family member or friend.
- 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 it off as quickly as possible.
