We’re all familiar with using credit cards for purchases, but what about getting cash from a credit card at an ATM? In this guide, we’ll walk through the process of obtaining cash advances, discuss the associated fees, and explore alternatives in a straightforward manner.
Most of us know how to use our credit cards for shopping, but not everyone is aware of how to withdraw cash from a credit card at an ATM. When you use your credit card for a cash advance, you essentially borrow money from your credit card to use for various needs, like paying rent or covering bills.
What is a cash advance?
A cash advance is like borrowing money from your credit card. Instead of using your card to buy things, you use it to get cash. This cash becomes part of your credit card balance.
Getting cash from your credit card can be handy, but using an ATM for a cash advance comes with costs. You’ll likely pay a fee at the ATM and face a higher interest rate on the cash you withdraw. In most cases, cash advance interest rates range from 20-25 percent APR, and interest starts adding up right away. There’s no grace period to avoid interest charges.
How to get cash from a credit card at an ATM
If you need to get money from a credit card at an ATM, here’s a simple guide:
- Insert your credit card into an ATM.
- Enter your credit card PIN.
- Choose the “cash withdrawal” or “cash advance” option.
- Select the “credit” option if needed (you may be asked to pick between checking, debit, or credit).
- Enter the amount of cash you want.
- Agree to any fees associated with the transaction.
- Complete the transaction and collect your cash.
Using a credit card at an ATM is similar to using a debit card—just follow the steps to withdraw cash, agree to any fees, and get your money.
Factors to Ponder Before Opting for a Cash Advance
There might be times when you need a cash advance due to an emergency, but before heading to an ATM with your credit card, plan to pay it off quickly. However, keep in mind three drawbacks:
Cash advance fees
Your bank will charge you a fee every time you use a credit card at the ATM. ATM fees are already high, so paying an extra cash advance fee is an expense to avoid. Check your card’s terms and conditions for the exact fee before using a cash advance.
High interest rates
Cash advance interest rates are often higher than the rates for regular purchases, and interest starts accumulating right away. This can add up, especially if you carry a balance on your credit card from month to month.
Effects on credit scores
Taking out a cash advance lowers your available credit, leading to a drop in your credit score. If the balance isn’t paid off and interest starts accruing immediately, your credit score may decrease. Lenders might also view you as more of a credit risk.
Alternatives to a cash advance
If you need cash but want to avoid extra expenses, consider these options:
- If you have a debit card, withdraw money from an ATM in your bank’s network to avoid cash advance fees.
- Visit a bank branch to cash a check in person.
- Use peer-to-peer payment apps like Venmo or Square Cash to send money to friends and family. Note that these apps may charge a 3 percent fee for credit card transactions.
Always consider a cash advance as a last resort. Exhaust all other options, such as using a debit card, a payment app, or a personal loan before deciding to get cash from a credit card at an ATM. Interest rates for cash advances are often higher, so be aware of the financial consequences if you can’t pay off your balance quickly.