How to Get Cash From a Credit Card
Key points about: cash advance credit card
A cash advance lets you borrow cash from your credit card, usually limited to a percentage of your total credit line.
Due to fees and interest, a credit card cash advance can be costly.
A cash advance is a short-term loan that increases the percentage of available credit you’re using, which can impact your credit score.
While credit cards are widely accepted, you may still find yourself in a bind for cash at times. A cash advance lets you use your credit card to withdraw cash at a bank, ATM, credit union, or sometimes by using checks. Essentially, you’re borrowing cash against your credit line instead of using your credit card to make a purchase.
However, there are differences between a cash advance and a credit card purchase. Here are some crucial points to consider when weighing whether to take a cash advance.
What’s a cash advance on a credit card?
A cash advance lets you take out cash by borrowing against your credit card’s line of credit.
How to take a cash advance from your credit card
- Set a PIN for your credit card to use it like a debit card at an ATM
- Bank Teller
- Bring a government-issued photo ID and your credit card to a bank
- Online Transfer
- Transfer cash to your checking account from your credit card account
- Request a blank check from your credit card company
What to know about a credit card cash advance
- Your credit card may have a cash advance limit
- The interest rate on a cash advance is often higher than the credit card purchase APR
- Credit cards usually have a cash advance fee
How much can I get from a credit card cash advance?
The amount you’re eligible to borrow using a cash advance is usually capped at a percentage of your total credit limit. Borrowers with good credit scores may be eligible to borrow more than those with lower scores.
Did you know?
If you have a credit limit of $1,000 and your card issuer offers cash advances up to 20% of your limit, you could borrow up to $200. Your recent credit card statement, online account, and cardmember agreement should have information about your cash advance limit.
Making a credit card cash withdrawal
ATM: You can withdraw cash from your credit card account using an ATM. However, you must set up a PIN with your credit card issuer. Using your PIN and the cash advance option, you can insert your credit card at any qualifying ATM to access funds immediately. Your withdrawal is subject to your cash advance limit, and the ATM may also have a limit on how much you can withdraw in a single day.
Bank: You can visit a bank or credit union teller to get a cash advance from your credit card account. You’ll need your credit card and a photo ID to withdraw the funds.
Convenience Check: You may be able to request convenience checks from your credit card company and use them the same way you use regular checks. Once a convenience check clears, the amount gets deducted from your credit limit.
Online Transfer: An online transfer is another way to pull cash from your credit card. You can log in to your credit card account to request the advance, which typically gets deposited into your checking account within a few days.
The cost of a cash advance
You can think of a credit card cash advance as a short-term loan, albeit a pricey one. A credit card cash advance typically comes with substantial credit card fees.
Cash advance fee: Your credit card cash advance will probably incur a cash advance transaction fee. This fee may be a set dollar amount per transaction or a percentage of the total cash amount you’re taking from your credit card account. Check your credit card terms for details on your card’s fees.
Cash advance interest rate: When you borrow cash from your credit card, you’ll often pay a higher interest rate than you do for regular purchases. And while everyday credit card purchases have a no-interest grace period if you pay your balance in full each month, most cash advances do not. Instead, interest usually starts accruing the day you take the advance. So, even if you make your payment in full by the due date, you’ll likely pay interest each day you carry the loan, from the day you receive your cash advance to the day you repay the entire loan amount.
ATM fee: Many banks charge a fee when you withdraw cash from their ATM. The same is true of making a withdrawal using your credit card. There could even be a separate fee for cash advance transactions.
Foreign cash advance fees: Foreign cash advances may be convenient while traveling, especially for emergencies, but you’ll have to decide if it’s worth the additional fees. Cardmembers trying to get foreign currency cash advances from their American credit cards may get hit with double or triple the transaction costs. Foreign transaction fees, ATM, currency conversion, and cash advance fees add up quickly. And that’s on top of the already higher interest rate you’ll likely pay for the cash advance.
Using your Discover card for a cash advance
You can get a cash advance with any Discover Card at over 500,000 ATMs or from participating banks and credit unions. You can also deposit cash from your Discover Card directly into your checking account, and you may be eligible to request checks online.
Will a cash advance hurt your credit score?
A cash advance can be tempting if you need cash fast, but you might want to consider how it could impact your credit score. Because you’re borrowing money against your credit limit, you’re increasing your overall credit utilization (how much of your total available credit is in use). And if you can’t pay the balance right away, high interest charges can put you deeper into credit card debt. When your total credit balance gets too high, it can negatively impact your credit score.
That said, a cash advance won’t necessarily have a long-term impact on your credit score. Your score will likely rebound if you can pay the loan off quickly. Paying more than your minimum monthly payment is one way to pay your credit card balance quicker. And credit card companies are required to apply amounts over your monthly minimum to the balance with the highest interest rate, according to the Office of the Comptroller of the Currency. In other words, your extra payments will go toward your cash advance loan before your regular interest purchases.
Should you take a cash advance on your credit card?
Because a cash advance is generally an expensive way to borrow money, it may help to add up the potential costs ahead of your decision. You may also want to consider other ways to borrow money, like a personal loan, which could provide a lower interest rate. Understanding the short- and long-term costs of any borrowing is key to finding the loan that’s right for you.
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