Need cash but only have a credit card? Here are several methods to how to get cash with a credit card using ATM withdrawals, and more.
In the realm of personal finance, there exist situations that demand immediate access to cash. Whether it’s an unexpected medical bill, a sudden car repair, or an emergency travel expense, the need for quick funds can arise at any moment. While debit cards and personal loans offer viable solutions, credit cards can also serve as a source of cash, albeit with unique considerations and potential drawbacks.
Cash advances, a form of short-term borrowing, allow credit cardholders to withdraw cash directly from their credit line. Unlike traditional purchases made with a credit card, cash advances are treated as loans, incurring interest charges from the moment the transaction is completed.
What are cash advances?
A cash advance is a short-term loan that you can take out against your credit card limit. You can typically get a cash advance in a few different ways:
- At an ATM: You can use your credit card to withdraw cash from an ATM.
- At a bank: You can go to a bank and ask for a cash advance over the counter.
- Through your credit card company’s website or app: You can sometimes get a cash advance by logging into your credit card company’s website or app and requesting one.
Cash advances are typically subject to higher interest rates and fees than regular credit card purchases. This is because cash advances are considered to be a higher risk for credit card companies.
Types of cash advances
Credit Card Cash Advances
This is the most common type of cash advance. You can take a cash advance from an ATM, bank branch, or over the phone. The interest rate on a cash advance is typically higher than the interest rate on regular credit card purchases, and there may also be fees involved.
Merchant Cash Advances
These are short-term loans that are offered to businesses by lenders. The lender will typically advance the business a sum of money, and the business will repay the loan with a percentage of its future sales. Merchant cash advances are typically more expensive than traditional bank loans, but they can be a good option for businesses that need quick access to cash.
Payday Loans
These are small, short-term loans that are typically due on the borrower’s next payday. Payday loans are very expensive, with interest rates that can reach 400% or more. They should only be used as a last resort, as they can trap borrowers in a cycle of debt.
Pros and cons of cash advances
Cash advances can be a convenient way to access quick cash, but they come with several drawbacks that should be carefully considered before taking one out. Here’s a summary of the pros and cons of cash advances:
Pros:
- Quick Access to Cash: Cash advances offer immediate access to funds, which can be helpful in emergency situations or when you need cash for an unexpected expense.
- No Credit Check Required: Cash advances typically don’t require a credit check, making them an option for those with poor or limited credit history.Wide Availability: Cash advances can be obtained through various methods, including ATMs, bank branches, and over the phone.
- Potential for Covering Overdraft Fees: Some people use cash advances to cover overdraft fees on their checking accounts. However, this should be considered a last resort as cash advances are more expensive than overdraft fees.
Cons:
- High Interest Rates: Cash advances typically carry higher interest rates compared to regular credit card purchases. This means that the cost of borrowing money through a cash advance can accumulate quickly if not repaid promptly.
- Fees: In addition to interest charges, cash advances often involve fees. These fees may include a cash advance fee, ATM fee, and foreign transaction fee.
- No Grace Period: Unlike regular credit card purchases, cash advances do not have a grace period. This means that interest begins accruing immediately from the date of the advance.
- Impact on Credit Score: While cash advances may not directly affect your credit score, the accumulation of debt and high-interest charges can indirectly damage your creditworthiness.
- Risk of Overspending: Easy access to cash through cash advances can increase the temptation to overspend, leading to further financial strain.
In general, cash advances should be considered a last resort due to their high costs and potential drawbacks. If you need immediate cash, explore more affordable alternatives like personal loans, payday loans (with caution), peer-to-peer (P2P) loans, or home equity loans.
How to get cash with a credit card
ATM withdrawals:
- Insert your credit card into the ATM.
- Enter your PIN.
- Select “Cash Advance” or “Withdraw.”
- Enter the amount of cash you want to withdraw.
- Collect your cash and receipt.
Bank teller withdrawals:
- Visit a bank branch.
- Present your credit card to the teller.
- Request a cash advance.
- Specify the amount of cash you want to withdraw.
- Receive your cash and receipt.
Things To Consider Before Taking a Cash Advance
1. Emergency or Non-Emergency:
Determine if the cash advance is truly for an emergency or if there are alternative options available. Cash advances should only be considered a last resort due to their high costs and potential negative consequences.
2. Understand the Costs:
Before taking a cash advance, thoroughly review the interest rates, fees, and repayment terms associated with your credit card. Cash advances typically carry higher interest rates than regular credit card purchases, and you may also be charged a cash advance fee, ATM fee, and foreign transaction fee.
3. Borrow As Little As Possible:
Only borrow the exact amount of money you need to cover the emergency expense. The less you borrow, the less interest you will accumulate over time.
4. Repay Promptly:
Prioritize repaying the cash advance as quickly as possible to minimize interest charges. Make extra payments if possible, or consider setting up a budget to help you repay the cash advance efficiently.
5. Avoid Regular Expenses:
Refrain from using cash advances to cover regular expenses, such as rent, groceries, or gas. These are the types of expenses that should be budgeted for and paid with cash or a debit card.
6. Compare Rates:
Not all credit cards have the same interest rates and fees for cash advances. If you must take a cash advance, compare rates from different credit card companies to find the most favorable terms.
7. Explore Alternatives:
Consider alternative sources of cash, such as using a debit card, getting a personal loan, or borrowing money from a trusted friend or family member. Cash advances should only be considered a last resort.
Remember, cash advances should be used sparingly and only in situations where they are absolutely necessary. By carefully evaluating your circumstances and understanding the associated costs, you can make informed decisions about using cash advances responsibly.
Tips for using cash advances responsibly
Cash advances can be a convenient way to access cash quickly, but they can also be very expensive if not used responsibly. Here are some tips for using cash advances responsibly:
- Only use cash advances for emergencies: Cash advances should only be used for emergencies when you absolutely need the money and have no other options.
- Understand the costs: Before you get a cash advance, be sure to understand the interest rates, fees, and repayment terms. Cash advances typically have higher interest rates than regular credit card purchases, and you may also be charged a cash advance fee and an ATM fee.
- Borrow as little as possible: Only borrow the amount of money you need and no more. The less you borrow, the less interest you will pay.
- Repay your cash advance as soon as possible: The sooner you repay your cash advance, the less interest you will pay. Make extra payments if you can, or consider setting up a budget to help you repay your cash advance quickly.
- Avoid using cash advances for regular expenses: Cash advances should not be used to pay for regular expenses, such as rent, groceries, or gas. These are the types of expenses that you should be budgeting for and paying with cash or a debit card.
- Shop around for the best rates: Not all credit cards have the same interest rates and fees for cash advances. If you do need to get a cash advance, compare rates from different credit card companies to find the best deal.
- Consider alternative sources of cash: There are many other ways to get cash, such as using a debit card, getting a personal loan, or borrowing money from a friend or family member. Cash advances should only be a last resort.
Using cash advances responsibly can help you avoid getting into debt trouble. If you are considering getting a cash advance, be sure to weigh the pros and cons carefully and only use it if it is absolutely necessary.
Alternatives to a cash advance
Cash advances can be a convenient but expensive way to access quick cash. Here are some alternatives to a cash advance that may be more affordable and less risky:
Personal Loan
A personal loan is a type of unsecured loan that allows you to borrow a fixed amount of money at a predetermined interest rate. Personal loans typically have lower interest rates than cash advances, and they may also have longer repayment terms. This can make them a more affordable option, especially if you need to borrow a larger amount of money.
Payday Loan
Payday loans are short-term loans that are typically due on your next payday. They are often advertised as a quick and easy way to get cash, but they come with very high interest rates and fees. Payday loans should only be considered a last resort, as they can easily lead to a cycle of debt.
Peer-to-Peer (P2P) Loan
A peer-to-peer (P2P) loan is a loan that is funded by individual investors. Borrowers can get P2P loans through online platforms. Interest rates on P2P loans can be lower than interest rates on credit cards or payday loans, but P2P loans may have stricter credit score requirements.
Home Equity Loan
A home equity loan is a loan that allows you to borrow money against the equity in your home. Home equity loans typically have lower interest rates than credit cards or payday loans, but they can put your home at risk if you are unable to repay the loan.