Drawing money directly from a credit card isn't typically how they're designed to be used. Credit cards are primarily for making purchases on credit, which you then repay later. However, there are a few ways you can access cash using your credit card, although these methods usually come with fees and interest charges.
Let's explore these options together, but before we dive in, have you ever considered using a credit card to get cash before? What was your initial thought or reason for wanting to do so?
Now, let's look at the common methods:
Step 1: Understanding the Options for Accessing Cash
There aren't many direct ways to "draw" money from your credit card like you would from a debit card linked to a bank account. However, the primary methods available are:
Cash Advances
This is the most direct way to get cash using your credit card. Think of it as borrowing cash against your credit limit.
QuickTip: Treat each section as a mini-guide.
- How it Works: You can usually get a cash advance at an ATM (if your card has a PIN), at a bank branch that partners with your credit card network, or sometimes through convenience checks issued by your credit card company.
- Important Considerations: Cash advances come with significant drawbacks:
- High Interest Rates: The interest rate on cash advances is often much higher than the purchase APR and usually starts accruing immediately, without a grace period.
- Fees: You'll likely be charged a cash advance fee, which is usually a percentage of the amount withdrawn or a flat fee, whichever is higher.
- Lower Credit Limit: Your cash advance limit is often a smaller portion of your overall credit limit.
Balance Transfers (Indirect Method)
While not a direct way to draw cash, a balance transfer could indirectly free up cash if you have a balance on another credit card or loan.
- How it Works: You transfer the balance from a high-interest account to your current credit card, ideally one with a lower or 0% introductory APR for balance transfers. This doesn't give you cash directly, but it can improve your cash flow by reducing your debt payments on the other account.
- Important Considerations:
- Balance Transfer Fees: Most balance transfers come with a fee, usually a percentage of the transferred amount.
- Limited Time for Introductory Rates: Low or 0% APR periods are usually temporary. Be sure you have a plan to pay off the transferred balance before the regular, often higher, APR kicks in.
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| How To Draw Credit Card Money |
Step 2: Initiating the Cash Access Process
The exact steps will vary depending on the method you choose.
For Cash Advances:
- Check Your Credit Card Agreement: Understand the cash advance limit, fees, and interest rates associated with your card. This information is usually available in your cardholder agreement or on your online account.
- Obtain a Cash Advance PIN (if needed): If you plan to use an ATM, you'll need a PIN specifically for cash advances. If you don't have one, you'll likely need to contact your credit card issuer to request one. This can take several business days to receive.
- Visit an ATM or Bank Branch:
- ATM: Insert your credit card, enter your cash advance PIN, and follow the prompts to withdraw the desired amount (up to your cash advance limit). Be mindful of ATM withdrawal limits as well.
- Bank Branch: Go to the teller and request a cash advance. You'll likely need to show identification.
- Consider Convenience Checks (if applicable): If your credit card company sends you convenience checks, you can write a check to yourself or someone else and then cash it at a bank. However, these are treated as cash advances with the same high fees and interest rates.
For Balance Transfers:
- Identify the Debt to Transfer: Choose the credit card or loan balance you want to transfer.
- Log in to Your Credit Card Account: Most credit card issuers allow you to initiate a balance transfer online or through their mobile app.
- Provide the Necessary Information: You'll typically need the account number, the name of the financial institution, and the amount you want to transfer.
- Review and Confirm: Carefully review the terms and fees associated with the balance transfer before submitting your request.
- Allow Processing Time: Balance transfers can take several business days to process. Continue making payments on your old account until the transfer is complete to avoid late fees.
Step 3: Understanding the Costs and Implications
It's crucial to be fully aware of the costs involved before proceeding with a cash advance.
- Calculate the Total Cost: Factor in the cash advance fee and the high interest that will start accruing immediately. Use online calculators or contact your credit card issuer for an estimate.
- Impact on Your Credit Score: While taking a cash advance itself doesn't directly hurt your credit score, it can indirectly impact it. A high balance on your credit card, resulting from the cash advance, can increase your credit utilization ratio (the amount of credit you're using compared to your total available credit). A high
1 credit utilization ratio can negatively affect your credit score.2 - Alternatives to Cash Advances: Before resorting to a cash advance, explore other options such as:
- Personal Loans: These often have lower interest rates than cash advances.
- Home Equity Line of Credit (HELOC): If you're a homeowner, this could be an option, but it's secured by your home.
- Borrowing from Friends or Family: This might be a less expensive option, but ensure clear terms and repayment plans.
- Selling Unused Items: Consider selling things you no longer need to generate cash.
Step 4: Responsible Repayment
If you do take a cash advance, it's vital to have a plan for prompt repayment.
Tip: Look for examples to make points easier to grasp.
- Pay More Than the Minimum: Due to the high interest rates, paying only the minimum amount will result in a significant amount of interest charges and a long repayment period.
- Prioritize Repayment: Make repaying the cash advance a priority to minimize the interest you accrue.
- Consider a Balance Transfer (to a different card): If you can qualify for a balance transfer to a card with a lower interest rate (though this might be difficult with a cash advance balance), it could save you money on interest in the long run.
Frequently Asked Questions (How to...)
How to find my cash advance limit?
Your cash advance limit is usually stated in your credit card agreement or can be found by logging into your online credit card account or calling customer service. It's typically a portion of your overall credit limit.
How to get a cash advance PIN for my credit card?
If you don't have a cash advance PIN, you'll need to contact your credit card issuer's customer service. They will likely mail you a PIN, which can take several business days to arrive.
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How to avoid cash advance fees?
The most effective way to avoid cash advance fees is to not take out a cash advance. Explore alternative options for accessing funds.
How to calculate the cost of a cash advance?
The total cost will include the cash advance fee (usually a percentage or flat fee) plus the accrued interest, which starts immediately at a typically high APR. Use online calculators or contact your issuer for an estimate based on the amount and expected repayment period.
Tip: Don’t skip — flow matters.
How to use a convenience check from my credit card?
If your credit card company sends you convenience checks, you can write a check to yourself or someone else and cash it at a bank. Be aware that these are treated as cash advances with associated fees and high interest rates.
How to do a balance transfer to free up cash indirectly?
You can transfer a balance from a high-interest debt to your credit card (ideally with a low or 0% introductory APR). This reduces your payments on the other debt, potentially freeing up cash flow, but it doesn't provide cash directly.
How to know the interest rate on a cash advance?
The interest rate for cash advances is usually listed in your credit card agreement and is often higher than the purchase APR. You can also find this information on your online account or by contacting customer service.
How to minimize the interest paid on a cash advance?
The best way to minimize interest is to repay the cash advance as quickly as possible, paying more than the minimum amount due.
QuickTip: Stop scrolling, read carefully here.
How to tell if an ATM allows credit card cash advances?
Most ATMs that are part of major networks (like Visa or Mastercard) will allow cash advances if your card has a PIN enabled for this purpose. Look for the Visa or Mastercard logo on the ATM. The prompts on the ATM screen will also usually indicate the option for a cash advance.
How to find alternatives to credit card cash advances?
Consider options like personal loans, HELOCs (if you're a homeowner), borrowing from friends or family, or selling unused items. These often have more favorable terms than cash advances.
Remember, while accessing cash from your credit card is possible, it's generally an expensive option best reserved for emergencies when no other alternatives are available. Always prioritize understanding the fees and interest rates involved before proceeding.
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