Maybe money is tight or you need cash for something that can’t be paid for with credit, or you’d simply like to learn about a different way to access cash and use your credit card. While its not as simple and cheap as getting cash with your debit card, you can use your credit card to withdraw cash. This is called a cash advance, and has plenty of drawbacks to doing it. Read on for more details.
Overview of How to Get Cash from a Credit Card
There are several ways to get cash from your credit card. The most common method is a ‘cash advance’, which includes withdrawing cash from an ATM, bank or credit union, or writing a convenience check in your own name. Convenience checks are blank checks provided by your bank, you may have received some in the mail with a monthly statement. You can also get cash back at a store.
Keep in mind that credit card companies often charge significant fees for cash advances, and these fees may be hidden. While these methods of accessing cash should be considered a last resort, it’s good to know about the options available to you. It’s important to note that your credit card may have a cash advance limit, which is different than your overall card limit. Cash advances typically don’t count towards any benefits associated with your credit card, like points or annual cash back rewards.
A cash advance accrues interest differently than regular purchases made on a credit card. Typically, your purchases show up on your credit card bill, and then you have a ‘grace period’ of about three to four weeks where the balance does not accrue interest. As long as you pay off your credit card balance in a timely manner, you won’t be charged interest. Cash advances are different. You’ll be charged interest from the day that you take out a cash advance, and the APR (annual percentage rate), or interest rate, is often higher than the APR for other transactions on your credit card.
For example, the Chase Freedom card offers clients an APR or interest rate of 15.99% to 24.74%, depending on your credit score and fluctuating based on the prime interest rate. However, if you take out a cash advance on this card, you will be charged interest from the transaction date at a rate of 25.99% – regardless of your creditworthiness! (See the Chase Freedom card’s Pricing & Terms page for more information.) On top of that, you will also be charged a separate cash advance fee. The Discover It for Students credit card charges either $10 or 5% of the amount of each cash advance, whichever is greater. If you take out a cash advance through an ATM, you might be charged an ATM withdrawal fee as well.
How to Get Cash from a Credit Card: the 4 Conventional Methods
1. Cash Advances through an ATM Withdrawal
In order to withdraw through an ATM, you need to have a PIN set up for your credit card. To set up a PIN, contact your financial institution by phone or visit your local branch in person. Check out Citi Credit’s Knowledge Center for more information on managing a credit card.
Simply go to an ATM, insert your credit card instead of your debit card, and withdraw money as a cash advance. Remember that your card may have a cash advance limit. You will likely be charged a cash advance fee plus an ATM withdrawal fee, depending on the terms of your credit card. You cannot withdraw more money than allowed by your cash advance limit or your available credit.
2. Cash Advances through Your Financial Institution
To access a cash advance through a bank, simply go to your local branch and inform the bank teller that you would like to withdraw cash through your credit card. Like cash advances through an ATM, you cannot withdraw more money than allowed by your cash advance limit or your available credit.
3. Cash Advances through a Convenience Check
Convenience checks are different than regular checks and are tied to your credit card, not your checking account. You can use a convenience check to get cash from your credit card by writing the check out to yourself, and going to the bank to cash it. Cash advances through convenience checks are typically subject to the same fees outlined above.
Unlike getting cash through an ATM or bank teller, cash advances through convenience checks may not be restricted to your card’s cash advance limit. Credit card companies often mail out convenience checks at times when people are likely to spend beyond their means, like the holidays. Remember that you will likely face a high interest rate and cash advance fees.
4. Cash Advance by Transferring Funds to a Checking or Savings Account
You can also get cash from a credit card by visiting your local branch in person or going online and transferring funds from your credit card to another account, like a checking or savings account. Like convenience checks, this method of getting cash from a credit card may not be restricted to a cash advance limit, but you will likely be charged a cash advance fee.
How to Get Cash from a Credit Card: the 2 Unconventional Methods
1. Get Cash Back at a Store
You can also get cash from your credit card by making a purchase at a store, and requesting ‘cash back’ (also known as ‘cash over’). Not all stores offer cash back, but most major chains do. Keep in mind that all of the fees described above still apply. Cash back is still considered a cash advance, and you will be charged interest accordingly: accruing from the transaction date, and likely at a very high rate. There are a couple of benefits to getting cash back through a store. First, you won’t need to pay an ATM transaction fee and you can keep whatever you buy, whereas your money is lost forever to an ATM transaction fee. Second, by getting cash back at a store you can avoid a trip to the bank and save time from looking for an ATM.
Most stores have a limit for how much money you can access through cash back. At Walmart, you can only get $100 cash back per transaction – but you can get around this by simply making multiple purchases. Of course, like cash advances through a bank, you cannot withdraw more money than your available credit limit.
There is one credit card that lets you get cash back without extra fees — the Discover Card. Subject to the store’s regular cash back limits, you can pay with your Discover Credit Card and use the terminal to select cash back, just like if you were paying with a debit card. If you don’t pay your monthly statement on time you’ll start accruing interest at your regular rate on that cash back, but besides that, Discover doesn’t charge any fees. You can apply for a Discover Card online.
2. Shop for a Friend
Another way to get cash from your credit card is by making a purchase for a friend or family member, and asking them to pay you back in cash. In many ways, this is the best way to use your credit card to access cash. First of all, you will avoid the steep interest charges that you would face if you took out a cash advance or got cash back at a store. Second, you don’t need to pay an ATM fee or a cash advance fee, or make a minimum purchase as you would when getting cash back. If you have a credit card with rewards, then the purchase could also contribute to your accumulation of points or your annual cash-back earnings.
Of course, the real catch here is that you need to pay off the purchase! If you don’t pay off your credit card balance, then you will be charged interest just like any other purchase, according to the terms of your card.
Best Credit Cards for Cash Back
Look for a credit card that offers a low interest rate and low fees for cash advances. This Barclaycard Ring MasterCard offers lower rates for cash advances: an interest rate of prime plus 4.75%, plus a $3 cash advance fee. As explained earlier, most credit cards charge around 25% in interest on cash advances, plus a significant cash advance fee (often $10 or 5% of the purchase, whichever is greater). A credit union in your area may offer better terms and fees for cash advances. For example, the Freedom+ card from American 1 Credit Union and the Visa Classic card from America’s Credit Union don’t charge fees for cash advances. If you know you’ll need cash advances, or you need to carry a balance, be sure to look for a card with a low interest rate and low or no fees.
Some credit cards offer special cash back or cash over terms, so you don’t need to pay extra fees. Discover credit cards don’t charge transaction fees or higher interest rates when you get cash back from a store. In fact, they work just like a debit card for the purposes of cash back. You will be charged the same interest rate as other purchases. Discover stipulates that you can only withdraw $120 in cash back every 24 hours, though there isn’t a monthly limit on cash back.
You can get cash from your credit card through cash advances (withdrawal from an ATM, bank teller, or convenience check), cash back with an in-store purchase, or by shopping for a friend. Remember that cash advances are some of the most costly transactions you can make with your credit card, and you will likely face a high interest rate and multiple fees. For these reasons, cash advances should be a last resort and made only after checking the terms of your credit card.