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How To Get Cash From a Credit Card

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When today’s consumers need cash in a hurry, there are many ways to get the money. The average household has 3.84 credit cards, which makes them one of the first places consumers turn to when they need money. Here’s how to get cash from a credit card and the factors to consider before you do.

What is a cash advance?

A cash advance is using your credit card to borrow cash instead of charging a purchase. Cash advances borrow against your credit card’s credit limit and must be repaid like any purchase. You can receive a cash advance through various methods, including an ATM withdrawal, a bank teller, a cash advance check or an online transfer.

Cash advances have many drawbacks. The card issuer typically charges a one-time fee plus a higher rate of interest on cash advances. Unlike normal credit card purchases, there is no grace period before interest starts to accrue.

How to get cash from a credit card

There are multiple ways to get cash from a credit card. Here’s how to withdraw cash from a credit card at the ATM, from a cash advance check and at the bank teller window.

Cash advance at the ATM

  1. Contact your bank to establish a PIN (if you don’t already have one).
  2. Find a participating ATM that has your credit card’s logo.
  3. Insert your credit card and enter your PIN code.
  4. Choose “cash withdrawal” or “cash advance.”
  5. Enter the amount of cash you’d like to receive.
  6. Be sure to stay below your cash advance and credit limits.
  7. Review and acknowledge fees that may be charged.
  8. Approve the transaction.
  9. Receive your cash.
  10. Collect your credit card from the ATM.

You’ll notice that how to get cash from a credit card is similar to the process of using your debit card to make a cash withdrawal.

Cash advance checks

Card issuers send cash advance checks to customers on a regular basis. You can use these checks like a traditional bank check to pay yourself or anyone else.

  1. If you don’t already have a cash advance check, contact your issuer to request one.
  2. Fill out the check with your name, date, and amount of the cash advance.
  3. Be sure to stay below cash advance and credit limits.
  4. Sign the check on the front.
  5. Write “for deposit only” and sign the back of the check.
  6. Deposit cash advance check into your bank account.

Cash advance in a branch

You may also be able to walk into a bank branch or contact your bank’s customer service center to get a cash advance. The in-person branch does not have to be the same bank that issues your credit card. In fact, you don’t even need to be a customer of that bank where you’re withdrawing the cash. It just needs to be in the same network as your credit card (Visa or Mastercard). However, keep in mind that the secondary bank may also charge you fees for the cash advance, which are in addition to the fees and interest charged by your credit card issuer.

  1. Locate a bank that displays the logo on your credit card (Visa or Mastercard).
  2. Request a cash advance on your credit card from the bank teller.
  3. Let them know how much cash you’d like to draw from your card.
  4. Provide your photo identification and credit card for verification.
  5. Enter your PIN code (contact your card’s issuer first, if you don’t already have one).
  6. Receive your cash.

Reasons not to withdraw cash from a credit card

Can you withdraw cash from a credit card? Yes. Should you? That depends. While getting cash from a credit card is quick and easy, there are downsides to using this financing option. Consider them carefully so that you don’t make a tough financial situation even worse.

You’ll pay a cash advance fee

Each time that you get cash from a credit card, the card issuer charges a fee. This fee is typically a percentage of the cash advance amount, with a minimum fee for each transaction.

Typical cash advance fees range from 3% to 5%. A $500 cash advance with a 5% fee incurs a charge of $25.

Cash advances come with higher interest rates

Not only do card issuers charge a fee on cash advances, but they also tend to charge higher interest rates on those balances. With higher interest rates, the extra interest charges can make it harder for consumers to pay off those balances.

No grace period on cash advances

Unlike normal credit card purchases, when you request cash from a credit card, there is no grace period. This means that you’ll start accruing interest on the cash advance amount immediately. By the time you receive your credit card statement, you’ll already owe more than the amount you borrowed.

Your credit score may take a hit

Credit card cash advances can affect your credit in multiple ways, including your credit utilization and payment history.

One of the main factors of your credit score is the utilization ratio. The more that you use your credit limit, the lower your score could go. Depending on the size of your cash advance, you could use up so much of your credit limit that it harms your credit score.

For people having financial difficulties, a large credit card payment could make the situation worse. If you don’t make the minimum monthly payment, the bank could put negative marks on your credit report. Since payment history makes up 35% of your credit score, late payments could dramatically lower your score.

Limit how much cash you can withdraw

Most credit cards place a maximum on the size of cash advances. These limits are based on your credit limit and your available credit. Some card issuers also have a maximum dollar amount allowed.

Typically, you can access up to 30% of your credit card’s limit with a cash advance. A person with a $15,000 credit limit could not get more than $4,500 with a cash advance from their credit card.

Additionally, you need to have available credit in order for your cash advance to be approved. If you only have $2,000 available credit, you cannot withdraw more than that.

Alternatives to a cash advance

Getting a cash advance from your credit card may be quick and easy, but it can be expensive and affect your credit. Consider these options instead to save money on fees and interest charges when you need money quickly.

Payment apps like Venmo, PayPal or Cash App

Credit cards can be added as payment sources for fintech apps like Venmo, PayPal or Cash App. This enables you to send money to friends and authorized merchants using the app. When using a credit card to send money, the app may charge you or the recipient a fee for the transaction.

Credit card promotional checks

Some credit card issuers send out checks to their customers with exclusive offers. These promotional checks can be used to consolidate debt, pay for car repairs, improve your home or pay individuals.

In some cases, these promotional checks offer a 0% interest rate for one year or longer. These checks may offer better terms than a standard cash advance transaction, such as lower fees or no interest for a period of time.

Debit card

A debit card is an ATM card that enables customers to make purchases like a credit card as well as withdraw money from a bank account. An easy way to tell if you have a debit card is to look for a Visa, Mastercard or American Express logo on the card. If you have money in your bank account, you can withdraw cash with your debit card at any ATM.

Credit card charge

In some cases, you may be able to talk a merchant into letting you use a credit card instead of cash. While not everyone accepts credit cards, a merchant may be willing to if you agree to cover the processing fees.

Another option is to use a service like Plastiq, which will send an electronic payment or paper check to eligible vendors for a small fee.

Margin loan from your brokerage account

Investors can borrow against the value of their investments without having to sell them. This allows your money to remain invested and doesn’t trigger a tax bill. Plus, the interest rates on margin loans can be much lower than a cash advance. However, keep in mind that the lender may sell your investments to cover the loan if they lose too much value.

Personal loan

A personal loan provides a lump sum of cash to meet your financial needs. These loans typically offer a fixed interest rate and a defined repayment period. You’ll make equal monthly payments until the loan is fully repaid. Depending on the lender, you could receive funds from a personal loan the same day.

Home equity loan

With home values rising, you may have equity in your home that you can access. Home equity loans typically have lower interest rates because these loans are secured by your home. The loan qualification process can take several weeks to complete. And the lender may require a home appraisal, tax returns and recent paycheck stubs before approving your loan request.

In some cases, the bank charges fees for the loan and requires borrowers to pay for the home appraisal. Because of the time and fees involved, you should consider a home equity loan only if you need a larger sum of money.

401(k) loan

Company retirement accounts can provide much-needed cash in an emergency. Most employers that offer 401(k) accounts allow employees to borrow against their balance. However, the IRS limits loan amounts to a maximum of 50% of your balance or $50,000, whichever is less.

These loans are good for people with bad credit because there are no credit qualifications to get approved. Keep in mind that you are literally borrowing from your future with this loan. And, if you leave your job before the loan is repaid, any outstanding balance could be considered a withdrawal. That could result in a large tax bill and early withdrawal penalties.

Borrow from friends or family

Friends and family are often there for you in an emergency, including when you need money in a hurry. However, borrowing from them can complicate relationships, especially if you have trouble repaying the loan.

The best approach is to create formal loan documents detailing the interest rate, repayment term and monthly payments. Ensure that the loan includes a reasonable interest rate. Otherwise, the IRS could assign an “imputed interest” amount and tax the lender for it, even if they didn’t actually earn any interest.

Get a paycheck advance

Traditional payday lenders can charge excessive fees and interest rates that trap borrowers into a devastating cycle. Paycheck advance apps reduce or eliminate many of those traditional fees to make the process more reasonable for borrowers. Many provide short-term loans without charging interest or requiring a credit check.

 

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