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Credit cards can be used to make purchases, earn rewards and build credit, but can you use a credit card at an ATM? Indeed, you can withdraw cash from a credit card, which is called a cash advance.A cash advance can certainly be convenient because there are some times that you just need access to cash — for example, some merchants only accept cash. But there are costs and fees associated with cash advances that you need to understand before doing so. In this article, we’ll walk you through what to consider before getting a cash advance and, if you decide to do so, how to get cash from a credit card.
What Is a Cash Advance?
A cash advance is a special kind of credit card transaction that allows you to borrow cash from your credit card account using an ATM. But because credit card issuers consider a cash advance to be a more risky type of transaction, they will typically impose a higher interest rate as well as several types of fees. Cash advances are also considered a separate balance from purchases and are subject to different credit card terms.
What to Consider Before Taking a Cash Advance
Before you insert your credit card into an ATM, you should understand all of the unique terms that apply to cash advance transactions. These include interest rates, additional fees and the potential effect on your credit score.
1. Interest Rate
Most credit cards will have a separate cash advance interest rate. For example, the Chase Freedom Unlimited is a popular rewards card that has a standard interest rate for purchases of 14.99% to 23.74%, depending on your creditworthiness. But when you use your card for a cash advance, the interest rate on that balance will be 24.99% APR, which is higher than the highest rate for purchases. Furthermore, cash advances from your credit card aren’t subject to the card’s grace period, an important part of how credit cards work typically. This means that you will be incurring interest on the amount of the advance on the day of the transaction. Interest will continue to accrue until you pay off your cash advance balance. However, an important thing to know when it comes to the way credit card payments work is that credit card issuers are required to apply payments made in excess of the required minimum payment to the balance with the highest interest rate first. In most cases, this will be the cash advance, which means the excess portion of your payments will first go toward lowering the amount of that balance.
2. Cash Advance Fees
Beyond having to pay a high interest rate to take a cash advance from your credit card, you should also expect to pay one or more fees for the transaction. For example, many credit cards have a cash advance fee of either $10 or 5% of the amount of each transaction, whichever is greater. On top of that, the ATM you visit could also impose fees. These fees can often be $3 to $5, and they’re something to look out for when reading your credit card statement.And if you use your credit card for a cash advance outside of the United States, then you may owe a foreign transaction fee of 3% as well. Most credit cards still have this fee, but an increasing number of travel rewards cards are eliminating it.
3. Potential Effect on Credit Score
Cash advances don’t have any greater effect on your credit score than other types of transactions. But just like any purchase, when you utilize a high percentage of your available credit, your credit score can fall. Be mindful of this when deciding whether to get cash from your credit card, especially if credit score improvement is top of mind for you.
Do All Credit Card Issuers Allow You to Take Out Cash?
Most credit card issuers allow cash advance transactions, but not all do. There are cards designed for people with poor credit or those who are rebuilding credit that have chosen not to allow these types of transactions.
How to Get Cash From Your Credit Card
Performing a cash advance with your credit card is very different from making a purchase. Read on for a step-by-step guide for how to get cash from a credit card.
1. Slot Your Credit Card Into an ATM
First, you’ll have to insert your credit card into the ATM. Some ATMs require you to remove your card, while others will keep it until the transaction is completed
2. Type in Your Credit Card PIN
One of the key differences between making a credit card cash withdrawal and making a purchase is that you’ll need to provide a personal identification number (PIN) before completing the transaction. This extra level of security prevents stolen credit cards from being used to quickly make irreversible cash withdrawals before the card can be reported stolen. If you haven’t already, you must select a PIN in advance from your credit card issuer.
3. Select “Cash Withdrawal” or “Cash Advance”
Next, you’ll have to select the option for cash withdrawal, which is sometimes labeled as “cash advance.”
4. Select “Credit”
The ATM may then ask you if you are using a credit or debit card, and you should select the credit card option.
5. Type in the Sum of Money You Want to Withdraw
Next, you’ll enter in the amount of the cash advance. Note that many ATMs will limit you to increments of $20, and that all ATMs will have a maximum transaction amount, which can range anywhere from $500 to $5,500. And if you’ve specified a cash advance limit with your credit card issuer, you won’t be able to withdraw more than that amount.
6. Accept Any Fees Associated With the Transaction
As stated, most ATMs will impose a transaction fee, which must be disclosed and agreed to before you can complete the transaction.
7. Complete the Transaction and Take Your Cash
The last step is to confirm the transaction and take the money. Many ATMs will require you to remove your credit card before you can take your cash to prevent you from accidentally leaving it in the machine.
Other Ways to Get Cash Without a Credit Card
There are other more economical ways to get cash without a credit card. Bank-issued debit cards and ATM cards are excellent ways to use an ATM to withdraw cash without having to pay high fees and interest rates. You can also visit a bank to withdraw money directly from the teller. Check cashing services are another option, but these can impose high fees and even higher interest rates on transactions.
Explore Credit Card Offers With Lantern
It is certainly possible to withdraw cash from a credit card, though you may incur fees and a higher APR when you do so. And while the process of how to get cash from a credit card differs from completing a transaction with a credit card, it’s still pretty straightforward to do. If you’re looking for the right card for your wallet to be able to get a cash advance or, even better, earn rewards or boost your credit score, Lantern by SoFi can help you with your search. We make comparing different cards and applying for a credit card easy with our tool that makes it easy to consider your options.
Frequently Asked Questions
What is the best way to withdraw money from a credit card?
Do I have to pay a transaction fee for withdrawing from a credit card?
How can I get cash from my credit card without a PIN?
Can I use my credit card at an ATM to deposit?
Photo credit: iStock/Shelyna Long
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About the Author
Jason Steele
Jason Steele has been writing about credit cards and award travel since 2008. One of the nation's leading experts in this field, he has contributed to dozens of personal finance and travel outlets and has been widely quoted in the mainstream media.
