Table of Contents
How do Cash Advances Work
How Much Does It Cost?
When It Doesn’t Involve Cash
What is the point at which it makes sense?
The Bottom Line
Personal Credit Cards for Finance
Can You Withdraw Money from a Credit Card?
Cash advances on credit cards provide quick access to money, but they are expensive.
By Rebecca Lake
Updated June 06, 2021.
Review by Thomas J. Catalano
If you require cash because of an emergency or pay for bills, you might wonder if it’s possible to cash it out of your credit card. Many credit card companies do allow you to get money from your account via the process of a cash advance. While that can be convenient in a pinch however, cash advances have some drawbacks to consider. When using the credit card you have to access cash, it’s important to take a look at the advantages and disadvantages.
The most important takeaways
Some credit card companies let you to withdraw funds from your credit card via an advance.
Depending on the card, you may be able to withdraw cash by depositing it in an account at a bank, or using your ATM card or by writing a convenience check.
Cash advances are often able to be more expensive than balance transfers or purchases and, as they are credited with interest, it begins to accrue on them immediately. Plus they often have fees.
How Cash Advances from Credit Cards work
Typically credit cards are intended to be used for purchases. For example, you can use your card at the checkout in shops or input your card’s number as well as expiration date to purchase items online. As you make purchases the credit you have available is reduced by the amount until you pay off your credit card charge.
Credit card cash advances are different. If your card permits them (and they’re not always available), you might have a credit limit that is only for purchases and a separate limit for cash advances, which is usually lower than the limit for purchases. If you make an advance in cash you are borrowing against this credit limit.
Additionally the cash advances start earning interest instantly, unlike purchases, which typically allow an additional grace period of 20-30 days to pay off your debt before interest begins to accrue.
There are several ways to take an advance in cash, such as:
You can request a cash transfer using the credit card you use to transfer money into your account at
Withdrawing cash at an ATM
Making a convenience check for yourself and cashing it at a bank
It is possible to find the cash advance limit you have by looking through your most recent credit card statement. If you aren’t able to find it, call the credit card company you have used to inquire if cash advances are an option on your card, and in the event that they are, what your limit is.
How Much Does it Cost to withdraw cash from a Credit Card?
Cash advances aren’t cheap. There are a variety of expenses to consider before taking one.
There’s first the cash advance charge. It’s a cost that the credit card company charges for the convenience of withdrawing cash from your cash advance limit. It can be an unrestricted cost, like $5 to $10 or a percentage of the advance of the amount, or the greater. The amount could differ depending on the card.
There is also the possibility of paying additional charges if you withdraw money from your credit card an ATM or bank branch. There is an ATM surcharge could be charged or you may be required pay a fee for a teller for this convenience.
The second component of the cost of cash advance refers to the annual percentage rate (APR). Most of the time, the cash advance APR is higher than the standard APR for purchases or balance transfers. As mentioned earlier, interest starts accruing immediately.
This is something to keep in mind when you’re searching for a low-cost way to get cash. Compared to a short-term personal loan like a cash advance, a cash advance could be a lot more expensive and carry a higher interest rate.
As with purchases, there’s no grace period for credit card cash advances. Interest begins accumulating right away.
Cash Advances that don’t require Cash
In some instances it is possible to treat transactions as cash advances even if you’re not transferring cash. For example, if you connect your credit card to the bank account to provide overdraft protection any money that’s used to pay for overdrafts will be considered a cash advance. There is also the possibility some transactions such as using your card to purchase cryptocurrency, are regarded as cash advances instead of purchases.
For that reason, it’s important to study your credit card terms and conditions thoroughly so that you know what is and isn’t a cash advance.
If you make a payment on your credit card, the minimum balance due will be added to your regular purchase balance first. Any additional payments are applied to the balance with the highest APR following. Therefore, if you have a balance for purchases on your credit card and you want to pay the balance in complete before making any payments transferred to the cash advance.1
When Does It Make Sense to withdraw cash from a Credit Card?
The option of withdrawing money through your credit card might seem like a good alternative when you’re in a tight spot financially. In the case, for instance, if your car is broken down and you have to pay a tow truck business that does not accept credit cards, then it could be the only option.
However, if the need isn’t urgent, you may consider alternative options to obtain cash as a credit card advance could be costly. For instance, you might consider:
The application process for an unsecure personal loan
The borrowing of money from family or friends
The process of obtaining the home equity loan
Indrawing funds out of an IRA or taking an 401(k) withdrawal or loan
Selling CDs, liquidating them or other assets to raise funds
All of them have pros and cons, just as a cash advance. Tapping retirement accounts, for instance, can be an easy way to get money but it could also result in tax-related penalties. Even if it doesn’t, you’re still shrinking your retirement nest egg. Home equity loans are a great option for low-interest rates, but you’re also putting your house on the line as collateral. Lending money to family members and friends can put money in your hands without interest, but it can also lead to relationship problems when you don’t repay it in the time frame you agreed to.
Note
The process of taking out a 401(k) loan essentially means borrowing money from your. However, keep in mind that if you decide to quit your job for reasons other than the loan is paid back and you’re required to pay it back in full and fast or it will be treated as a taxable distribution.
The Bottom Line
Cash advances on credit cards offer certain advantages, however they are expensive when compared with other ways to borrow money. If you require funds, but it’s not a dire need, it’s a good idea to research your alternatives before you commit to a credit card cash advance. And if you do end up withdrawing cash from your account Try to settle the balance as soon as you can in order to limit the cost of interest.
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