Can I Take Out Money With My Credit Card?

Yes, you can take out money with your credit card, but it’s crucial to understand the implications. At money-central.com, we’re dedicated to providing you with clear, actionable insights into managing your finances wisely, and using your line of credit for cash comes with significant costs and potential risks that we’ll explore together in detail. Understanding cash advances, associated fees, and their impact on your credit score can help you make informed financial decisions.

1. What Is a Cash Advance and How Does It Work?

Yes, you can, but it is generally not recommended due to high costs and potential negative impacts. A cash advance is essentially a short-term loan from your credit card issuer. It allows you to withdraw cash from an ATM or bank using your credit card.

• How it Works: Instead of using your debit card to access money directly from your bank account, you’re borrowing money from your credit card’s available credit line. This borrowed amount accrues interest immediately, and often at a higher rate than your standard purchase APR.

Cash advances should be a last resort due to the fees and high-interest rates, if you’re facing immediate needs you might want to consider alternatives.

2. What Are the Fees Associated With Credit Card Cash Advances?

Yes, and it’s essential to be aware of all the potential expenses involved. Credit card cash advances come with a variety of fees that can quickly add up and make this a costly way to access funds.

• Cash Advance Fee: This is a one-time fee charged as a percentage of the amount you withdraw. It typically ranges from 3% to 5% of the cash advance amount, with a minimum fee.
• ATM Fee: If you withdraw the cash advance from an ATM, the ATM operator will likely charge a fee. This fee can vary depending on the ATM and your bank’s policies.
• Higher Interest Rates: Cash advances usually have higher interest rates than regular purchases made with your credit card. This means you’ll start accruing interest immediately, without a grace period.
• No Grace Period: Unlike regular credit card purchases, cash advances usually do not have a grace period. Interest starts accruing from the moment you withdraw the cash, which can significantly increase the overall cost.

To avoid these charges, carefully evaluate your need for cash and explore all available options before resorting to a cash advance.

3. How Do Cash Advances Impact Your Credit Score?

Cash advances themselves don’t directly appear as a separate line item on your credit report, but they can indirectly affect your credit score.

• Increased Credit Utilization: The most significant impact is on your credit utilization ratio, which is the amount of credit you’re using compared to your total available credit. A high credit utilization ratio can negatively affect your credit score.
• High-Interest Charges: High interest charges can make it more difficult to pay off your balance, leading to late payments or defaults, which can severely damage your credit score.
• Impact on Creditworthiness: While cash advances don’t directly lower your credit score, they can signal to lenders that you are relying on credit for immediate cash needs. This can make lenders view you as a higher-risk borrower, which can affect your ability to get approved for loans or credit in the future.
• Cash Advance Limit: Cash advance limits are often lower than your overall credit limit, which can lead to maxing out this portion of your credit line more quickly. Maxing out your cash advance limit can also negatively impact your credit utilization ratio.

4. What Are the Alternatives to Taking Out a Cash Advance?

Yes, consider other alternatives before resorting to a cash advance, which often come with lower costs and less risk.

• Personal Loans: These loans typically have lower interest rates than credit card cash advances. They provide a lump sum of money that you repay in fixed monthly installments.
• Balance Transfers: If you have other credit card debt with high interest rates, consider transferring that debt to a credit card with a lower interest rate or a promotional 0% APR period.
• Credit Card with a 0% APR Promotion: Some credit cards offer a 0% introductory APR on purchases and balance transfers for a limited time. Using such a card can help you avoid interest charges during the promotional period.
• Emergency Fund: If you have an emergency fund, now is the time to use it. While it may be tempting to preserve your savings, using your emergency fund to cover unexpected expenses can save you from incurring high-interest debt.
• Negotiate with Creditors: If you’re struggling to pay your bills, contact your creditors to see if they can offer a payment plan or temporary hardship assistance. They may be willing to work with you to lower your interest rate or waive late fees.
• Borrow from Friends or Family: If possible, consider borrowing money from friends or family. Just be sure to establish clear terms for repayment to avoid any misunderstandings or strained relationships.
• Payday Alternative Loans (PALs): Offered by some credit unions, PALs are small-dollar loans with lower interest rates than payday loans. They can be a better option if you need quick access to funds.
• Home Equity Line of Credit (HELOC): If you own a home, you may be able to tap into your home equity with a HELOC. This can provide a flexible source of funds with relatively low-interest rates, but keep in mind that your home is used as collateral.
• Side Hustle: Consider taking on a side hustle to earn extra money to cover your immediate expenses. This could include freelancing, driving for a rideshare service, or selling items online.
• Check money-central.com: Visit our website for more tools and financial advice to navigate your situation.

5. How Can You Minimize the Risks of Taking Out a Cash Advance?

If taking out a cash advance is unavoidable, there are steps you can take to minimize the associated risks:

• Borrow Only What You Need: Take out only the amount of cash you absolutely need to cover your immediate expenses. Avoid borrowing more than necessary, as this will only increase the amount of interest and fees you’ll have to pay.
• Pay It Back Quickly: The sooner you pay back the cash advance, the less you’ll pay in interest. Make it a priority to repay the balance as soon as possible.
• Create a Budget: Develop a budget to track your income and expenses. This can help you identify areas where you can cut back on spending to free up funds for repayment.
• Avoid Using Your Credit Card for Other Purchases: While you’re paying off the cash advance, avoid using your credit card for other purchases. This will help you keep your credit utilization ratio low and prevent you from accumulating more debt.
• Monitor Your Credit Score: Keep an eye on your credit score to see how the cash advance is affecting it. If you notice a significant drop, take steps to improve your credit utilization ratio and pay off your balance.
• Set Up Automatic Payments: Set up automatic payments from your bank account to ensure you never miss a payment. This can help you avoid late fees and maintain a good credit history.
• Shop Around for Lower Interest Rates: Some credit cards offer lower interest rates on cash advances than others. If you have multiple credit cards, compare the rates and choose the one with the lowest rate.
• Be Aware of Your Credit Limit: Make sure you know your credit limit and how much of it is available for cash advances. Avoid exceeding your credit limit, as this can result in over-limit fees and damage your credit score.
• Consider a Secured Credit Card: If you have bad credit or a limited credit history, consider getting a secured credit card. These cards require a security deposit, but they can help you build credit and may offer lower interest rates than unsecured cards.

Person holding a credit card

6. What Credit Cards Should I Consider For Cash Advances?

Yes, if you decide to take out a cash advance, selecting the right credit card can help you minimize costs. Here are some cards to consider:

Credit Card	APR on Purchases	APR on Cash Advances	Cash Advance Fee	Other Features
Capital One QuicksilverOne Cash Rewards Credit Card	29.74% (Variable)	29.74% (Variable)	3% or $10, whichever is greater	Good for building credit; earns cash back on purchases
Blue Cash Preferred® Card from American Express	20.24% – 29.24% (Variable)	29.49% (Variable)	3% or $5, whichever is greater	Earns high cash back on groceries and gas; requires good to excellent credit
Discover it® Cash Advance	Varies	Varies	5%	None (this is primarily a cash advance card)
Wells Fargo Platinum Card	0% Intro APR for 18 months	High (after intro period)	Varies	Intro APR on purchases and balance transfers
Chase Sapphire Preferred® Card	Varies	Varies	Varies	Excellent travel rewards; requires good to excellent credit
U.S. Bank Cash+® Visa Signature® Card	Varies	Varies	Varies	Customizable cash back categories; requires good to excellent credit
Citi® Double Cash Card	Varies	Varies	Varies	Earns cash back on all purchases; requires good to excellent credit
Bank of America® Travel Rewards Credit Card	Varies	Varies	Varies	Earns travel rewards on all purchases; requires good to excellent credit
American Express Cash Magnet® Card	Varies	Varies	Varies	Earns cash back on all purchases; requires good to excellent credit
Chase Freedom Unlimited®	Varies	Varies	Varies	Earns cash back on all purchases; requires good to excellent credit

Disclaimer: Interest rates and fees are subject to change. Check the card issuer’s website for the most current information.

7. What Are the Potential Long-Term Financial Impacts of Relying on Cash Advances?

Relying on cash advances can have significant long-term financial impacts.

• Debt Accumulation: The high-interest rates and fees associated with cash advances can quickly lead to debt accumulation. The more you rely on cash advances, the harder it becomes to pay off your balance and break the cycle of debt.
• Credit Score Damage: Consistent reliance on cash advances can negatively impact your credit score. High credit utilization ratios, late payments, and defaults can all damage your credit score and make it harder to qualify for loans or credit in the future.
• Increased Financial Stress: The stress of managing high-interest debt can take a toll on your mental and emotional health. Financial stress can lead to anxiety, depression, and other health problems.
• Limited Financial Opportunities: A poor credit score can limit your financial opportunities. You may have difficulty getting approved for loans, renting an apartment, or even getting a job.
• Difficulty Saving for the Future: When you’re burdened by high-interest debt, it can be difficult to save for the future. This can delay your ability to achieve important financial goals, such as buying a home, starting a family, or retiring comfortably.
• Erosion of Net Worth: Over time, the cost of cash advances can erode your net worth. The interest and fees you pay on cash advances could be used for investments or other wealth-building activities.
• Dependence on Credit: Relying on cash advances can create a dependence on credit. This can make it difficult to manage your finances responsibly and avoid debt in the future.

8. Can a Cash Advance Exceed My Credit Limit?

Typically, no. Credit card companies usually set a specific cash advance limit that is lower than your overall credit limit.

• Lower Limit: The cash advance limit is the maximum amount you can withdraw as cash using your credit card.
• Fees for Exceeding Limit: Attempting to exceed this limit will usually result in a declined transaction. Even if the transaction goes through, you may be charged an over-limit fee, and your APR might increase.
• Impact on Credit Utilization: Exceeding your credit limit can significantly impact your credit utilization ratio, negatively affecting your credit score.

Always check your cash advance limit before attempting to withdraw funds to avoid potential fees and credit score damage.

9. How to Find a Credit Card’s Cash Advance Limit and APR?

Yes, it’s important to know the cash advance limit and APR of your credit card before using this feature.

• Review Your Credit Card Agreement: The terms and conditions of your credit card agreement should outline the cash advance limit and APR.
• Check Your Online Account: Most credit card issuers allow you to view your cash advance limit and APR online or through their mobile app.
• Call Customer Service: You can call the customer service number on the back of your card and ask a representative to provide you with this information.
• Check Your Billing Statement: Your monthly billing statement may also include information about your cash advance limit and APR.

Knowing these details can help you make informed decisions about using cash advances and avoid unexpected fees and interest charges.

10. What is the Difference Between a Cash Advance and a Regular Purchase on a Credit Card?

There are several key differences between a cash advance and a regular purchase on a credit card.

• Interest Rates: Cash advances typically have higher interest rates than regular purchases.
• Grace Period: Regular purchases usually have a grace period, meaning you have a certain amount of time to pay off your balance before interest accrues. Cash advances typically do not have a grace period, and interest starts accruing immediately.
• Fees: Cash advances often come with a cash advance fee, which is a percentage of the amount you withdraw. Regular purchases typically do not have these fees unless you carry a balance and incur interest charges.
• Impact on Credit Score: While both cash advances and regular purchases can impact your credit score, cash advances can have a more significant impact if they increase your credit utilization ratio or lead to late payments.
• Rewards: Some credit cards offer rewards, such as cash back or points, on regular purchases. However, most credit cards do not offer rewards on cash advances.
• Transaction Type: A regular purchase involves using your credit card to buy goods or services from a merchant. A cash advance involves withdrawing cash from an ATM or bank using your credit card.

Credit cards and cash

11. Are There Any Credit Cards That Do Not Offer Cash Advances?

Yes, some credit cards do not offer cash advances as a feature. This is more common with certain types of cards, such as:

• Secured Credit Cards: These cards are designed for individuals with limited or poor credit history and often do not include a cash advance option.
• Store Credit Cards: Many store-branded credit cards do not offer cash advances. They are primarily intended for purchases at the specific store or affiliated retailers.
• Some Low-Limit Cards: Some credit cards with very low credit limits may not offer cash advances to minimize risk.
• Charge Cards: Charge cards, which require the balance to be paid in full each month, typically do not offer cash advances.

If you prefer to avoid the temptation of cash advances, consider choosing a credit card that does not offer this feature.

12. What Should I Do If I Can’t Afford to Pay Back a Cash Advance?

If you find yourself unable to afford to pay back a cash advance, it’s important to take action quickly to mitigate the potential consequences:

• Contact Your Credit Card Issuer: Reach out to your credit card issuer to discuss your situation and explore possible options. They may be willing to work with you to create a payment plan or offer temporary hardship assistance.
• Create a Budget: Develop a detailed budget to track your income and expenses. This can help you identify areas where you can cut back on spending to free up funds for repayment.
• Seek Credit Counseling: Consider seeking guidance from a credit counseling agency. A credit counselor can help you assess your financial situation, develop a debt management plan, and negotiate with your creditors.
• Explore Debt Consolidation Options: Look into debt consolidation options, such as a personal loan or balance transfer, to potentially lower your interest rate and simplify your payments.
• Consider a Debt Management Plan (DMP): A DMP is a structured repayment plan offered by credit counseling agencies. It involves making monthly payments to the agency, which then distributes the funds to your creditors.
• Communicate Openly: Keep your credit card issuer informed about your situation and any progress you’re making towards repayment. Open communication can help you avoid late fees and maintain a good relationship with your creditor.
• Avoid Taking Out Additional Debt: While you’re working to repay the cash advance, avoid taking out additional debt. This can only worsen your financial situation and make it harder to get back on track.
• Prioritize Payments: Focus on making at least the minimum payment on your credit card to avoid late fees and damage to your credit score. If possible, try to pay more than the minimum to reduce your balance and lower your interest charges.
• Seek Legal Advice: If you’re facing legal action from your credit card issuer, consider seeking legal advice from an attorney specializing in debt collection.

13. How to Protect Yourself From Credit Card Fraud When Taking Out Cash Advances?

Yes, protect yourself from credit card fraud when taking out cash advances:

• Use Secure ATMs: Only use ATMs at reputable banks or financial institutions. Avoid using ATMs in isolated or poorly lit areas, as they may be more vulnerable to tampering.
• Cover the Keypad: When entering your PIN at the ATM, cover the keypad with your hand to prevent others from seeing your code.
• Inspect the ATM: Before using an ATM, inspect it for any signs of tampering, such as loose or damaged parts, unusual attachments, or suspicious stickers.
• Be Aware of Your Surroundings: Pay attention to your surroundings when using an ATM. If you notice anyone acting suspiciously, cancel your transaction and leave immediately.
• Monitor Your Account Regularly: Check your credit card statements and online account activity regularly for any unauthorized transactions.
• Sign Up for Fraud Alerts: Many credit card issuers offer fraud alerts that notify you via text message or email whenever suspicious activity is detected on your account.
• Report Lost or Stolen Cards Immediately: If your credit card is lost or stolen, report it to your credit card issuer immediately.
• Use a Strong PIN: Choose a strong PIN that is difficult for others to guess. Avoid using easily identifiable information, such as your birthdate or address.
• Shred Unwanted Documents: Shred any unwanted documents containing your credit card number or other sensitive information.
• Be Cautious of Phishing Scams: Be wary of phishing emails or phone calls asking for your credit card information. Legitimate credit card issuers will never ask for your PIN or other sensitive information via email or phone.

14. What Are Some Common Misconceptions About Credit Card Cash Advances?

Yes, it’s important to clear up common misconceptions about credit card cash advances to avoid making financial mistakes.

• Misconception: Cash advances are a cheap way to get cash.

  • Reality: Cash advances are one of the most expensive ways to borrow money due to high-interest rates and fees.

• Misconception: Cash advances don’t affect your credit score.

  • Reality: While cash advances don’t directly appear as a separate line item on your credit report, they can indirectly affect your credit score by increasing your credit utilization ratio and potentially leading to late payments or defaults.

• Misconception: You have a grace period on cash advances like regular purchases.

  • Reality: Cash advances typically do not have a grace period, and interest starts accruing immediately from the date of withdrawal.

• Misconception: The interest rate on cash advances is the same as the purchase APR.

  • Reality: Cash advances usually have higher interest rates than regular purchases made with your credit card.

• Misconception: You can withdraw as much cash as your credit limit allows.

  • Reality: Credit card companies usually set a specific cash advance limit that is lower than your overall credit limit.

• Misconception: Cash advances earn rewards like regular purchases.

  • Reality: Most credit cards do not offer rewards, such as cash back or points, on cash advances.

• Misconception: It’s okay to use cash advances for non-emergency expenses.

  • Reality: Cash advances should be reserved for true emergencies only due to their high cost.

• Misconception: Cash advances are a good way to build credit.

  • Reality: Using cash advances does not help build credit. In fact, it can negatively impact your credit score if not managed responsibly.

• Misconception: All credit cards offer cash advances.

  • Reality: Some credit cards, such as secured credit cards and store credit cards, do not offer cash advances as a feature.

• Misconception: You can avoid cash advance fees by using a different ATM.

  • Reality: The cash advance fee is charged by the credit card issuer, not the ATM operator. You’ll still be charged the fee regardless of which ATM you use.

15. What Resources Can I Use to Improve My Financial Literacy and Avoid Needing Cash Advances?

Improving your financial literacy can help you make informed decisions and avoid the need for costly cash advances.

• Money-Central.com: Our website offers a wealth of articles, guides, and tools to help you manage your finances effectively. Explore our resources on budgeting, saving, investing, and debt management.
• Financial Education Websites: Websites like the Financial Industry Regulatory Authority (FINRA) and the Consumer Financial Protection Bureau (CFPB) offer free educational resources on a wide range of financial topics.
• Credit Counseling Agencies: Non-profit credit counseling agencies can provide free or low-cost financial counseling and education services.
• Online Courses: Platforms like Coursera, Udemy, and edX offer online courses on personal finance and investing.
• Books: There are many excellent books on personal finance that can help you improve your financial literacy. Some popular titles include “The Total Money Makeover” by Dave Ramsey and “Rich Dad Poor Dad” by Robert Kiyosaki.
• Podcasts: Financial podcasts can provide valuable insights and tips on managing your money. Some popular podcasts include “The Dave Ramsey Show” and “So Money with Farnoosh Torabi.”
• Seminars and Workshops: Attend financial seminars and workshops in your community to learn from experts and network with other individuals interested in improving their financial literacy.
• Financial Apps: Utilize financial apps to track your spending, create budgets, and set financial goals. Some popular apps include Mint, YNAB (You Need a Budget), and Personal Capital.
• Libraries: Your local library is a great resource for books, magazines, and other materials on personal finance.
• Community Organizations: Local community organizations may offer free financial education programs and workshops.

FAQ: Credit Card Cash Advances

• Can I use a credit card to get cash?

  • Yes, you can get cash with a credit card through a cash advance. However, it’s generally not recommended due to the high fees and interest rates associated with cash advances.

• What is a cash advance fee?

  • A cash advance fee is a fee charged by your credit card issuer when you take out a cash advance. It is typically a percentage of the amount you withdraw, with a minimum fee.

• How does a cash advance affect my credit score?

  • A cash advance doesn’t directly show up on your credit report, but it can indirectly affect your credit score by increasing your credit utilization ratio and potentially leading to late payments or defaults.

• Is there a grace period on cash advances?

  • No, unlike regular credit card purchases, cash advances typically do not have a grace period. Interest starts accruing immediately from the date of withdrawal.

• What is the APR on cash advances?

  • The APR on cash advances is typically higher than the APR on regular purchases made with your credit card.

• Can I exceed my credit limit with a cash advance?

  • No, credit card companies usually set a specific cash advance limit that is lower than your overall credit limit.

• What are the alternatives to taking out a cash advance?

  • Alternatives to taking out a cash advance include personal loans, balance transfers, emergency funds, and negotiating with creditors.

• How can I minimize the risks of taking out a cash advance?

  • You can minimize the risks of taking out a cash advance by borrowing only what you need, paying it back quickly, and creating a budget.

• Are there any credit cards that do not offer cash advances?

  • Yes, some credit cards, such as secured credit cards and store credit cards, do not offer cash advances as a feature.

• What should I do if I can’t afford to pay back a cash advance?

  • If you can’t afford to pay back a cash advance, contact your credit card issuer, create a budget, and seek credit counseling.

At money-central.com, we understand the challenges of managing finances. We provide accessible, reliable information to help you make informed decisions. From understanding credit utilization to finding the best credit cards, our resources are designed to empower you. Don’t let financial complexities hold you back – explore money-central.com today for tools and expert advice tailored to your needs. Take control of your financial future and achieve your goals with confidence.