How to Do a Cash Advance on a Credit Card?

If you have a credit card, you may not know this, but you can actually use it to withdraw cash from an ATM or transfer money from your credit to your checking account. So, how can you do a cash advance using your credit card? We will explain this in much detail below.

How to do a Cash Advance on a Credit Card?

At most banks, to do a cash advance on your credit card, all you have to do is transfer money from your credit card to the account you want the funds deposited. To do a cash advance at an ATM, you first need to setup a PIN number for your credit card. After setting up your PIN number, you should go to an ATM, insert your credit card, and select the option to withdraw cash from your credit card account.

That said, you should be aware that most ATMs have a limit on the amount of cash that you can withdraw per day, so if you need a large amount, you should go into the bank and ask the teller to perform a cash advance for the amount you need. Most banks will allow you to withdraw large amounts ($1,000+) if you go into the bank and verify your identity using your identification card.

If you withdraw cash from your credit card, you should be aware that cash advances are often very expensive. Most card issuers will charge you a fee that ranges from 3% to 5% of the transaction amount. So, if you were to withdraw $1,000, most banks will charge you a $30 to $50 fee to make the withdrawal.

In addition to paying a cash advance fee, most card issuers will charge you a higher interest rate on the funds that you withdrew. When you make a normal purchase, you’re usually charged a regular APR rate, such as 17.99%, however, when you make a cash advance, you will be charged a higher APR, such as 24.99% on the amount that you withdrew in cash using your credit card. So, this is just something to keep in mind.

What is a Cash Advance?

A cash advance is a withdrawal of cash from your credit card account against your credit limit. Most credit card issuers limit the amount of cash that you can withdraw from your credit card. When you withdraw cash from your credit card, you’re free to use the cash withdrawn as you see fit.

That said, when you take a cash advance, you must repay it to the card issuer, just as you would repay a personal loan. Cash advances from credit cards are a very expensive way to borrow cash. Unlike a loan where you have to make a set payment amount until you repay the debt, with a cash advance, you can repay the money you borrowed at your own pace.

If you wish to do so, you can repay the entire amount at the end of the money, or you can make the minimum payment required by your card issuer, the decision is up to you. In this respect, you have way more flexibility in repaying a cash advance vs repaying a personal loan.

Having said that, almost all card issuers place a limit on the amount of cash that you can withdraw from your credit card. Your cash withdrawal limit will probably be lower than your regular credit limit. For example, you may have a $7,000 credit limit for regular purchases, however, the available credit for cash may be limited to, for example, $2,500.

CSP Pro Tip: You should only take out a cash advance if you have no other options. This is so because cash advances come with hefty fees and a higher interest rate on the amount withdrawn. So, only use them if absolutely necessary. You can check the terms for cash advances by consulting your cardholder agreement. This agreement will give you the amount of cash you can withdraw, as well as the fees and interest rate on the amount of money you withdraw.

What Does it Cost to do a Cash Advance on a Credit Card?

The two major things that you should consider when calculating the cost of a cash advance are the cash advance fee charged by your card issuer and the APR for cash advances.

The cost to take out a cash advance typically range from 3% to 5% of the amount of the transaction. So, if you were to take out a $2,000 cash advance, you should expect to pay approximately $60 to $100 withdraw this amount from your credit card.

If you’re withdrawing a small amount, such as $50, you should be aware that your card issuer may charge you a minimum fee, such as $5 or $10 to withdraw the amount.

In addition to the cash advance fee, if you’re making an out of network cash advance, you may be charged an additional fee for using the ATM. For example, if you have a Chase credit card and you’re using a Bank of America to withdraw cash from your credit card, Bank of America may charge you a fee for using its ATM. Usually, when you use the card issuer’s ATM, you will not be charged an ATM fee for withdrawing cash from the ATM.

After you take a cash advance, the next fee you need to consider is the APR that your card issuer will charge you for withdrawing cash from your credit card. Usually, you have two different APRs, an APR for regular purchases and an APR for cash advances. The APR for a cash advance is considerably higher than the APR for regular purchases.

For example, if you consult your cardholder agreement, you may notice that for regular purchases your APR is 17.99%, while the APR for cash advances may be 24.99%. Please remember these numbers are an example, your APR will be different than these.

In addition to the higher APR, with regular purchases, you are given a grace period to pay down your balance before interest begins accruing or adding up on the balance. With a cash advance, interest is charged on the balance the same day the cash is withdrawn from the credit card.

Things get more complicated if you had a balance on your credit card prior to making the cash advance. If you make a payment on your account, the cash advance will most likely be the last balance that’s paid off. So, when you make your minimum payment, the payment will be applied to the balance with the lower interest rate first, and then your payments will be applied to the cash advance, making it very costly to use your credit card to withdraw cash.

Alternatives to Making a Cash Advance on Your Credit Card

At this point, you probably know that cash advances are expensive, so here are some alternative to withdrawing cash from your credit card that you should consider:

  • If the amount is large, you should consider taking out a personal loan
  • You should consider contacting friends and family to lend you money
  • You could withdraw money from your retirement account if you’re in a crunch
  • You can obtain a home equity line of credit or home equity loan

Regardless of which option you choose to obtain cash, one things is for sure, each option comes with advantages and dsiadvantages. For example, if you borrow money from friends and family, you may get asked what you need the money for and your friend and family will know that you’re in a financial crunch.

If you choose to withdraw money from your retirement account, you’re basically borrowing money from your future, which will not hurt you now, but may later in the future. If you choose to take a home equity loan, you will probably prolong the amount of time it takes you to pay down your home.

Regardless of which option you choose to get the cash that you need, we hope that you now fully understand how to take out a cash advance on your credit card, as well as the fees associated with doing so.

How to Get a Pin Number to Perform a Cash Advance?

If you want to perform a cash advance at an ATM without walking into the bank, you should contact your bank and have them setup a pin number for your credit card. Oftentimes, your pin number is mailed to you after you receive your credit card, but we understand that not many people pay attention to this mail and either misplace it or forget it.

Many banks will allow you to setup a pin number for your credit card through your online banking portal. Bank of America and Chase will allow you to setup a pin number for your credit card online.

However, if you don’t have your online bank setup or you simply don’t know how to setup a pin number, you can always give your card issuer or bank a call and ask them to assist you with setting up a pin number for your credit card.

That said, if you need cash right away and don’t have a PIN, you can always walk into the bank that issued your credit card and ask the teller to perform a cash advance for you. The teller will likely ask you for ID and some information, but most banks will be more than happy to assist you with a cash advance.

Credit Score Planet Frequently Asked Questions

1. How to take a cash advance without a PIN number?

If you don’t have a PIN number for your credit card, you can make a cash advance by visiting the bank that issued your credit card and asking a teller to perform a cash advance transaction for you. You will need your ID and you may need to fill in some information, but most banks will be more than happy to help you.

2. Can you withdraw money from your credit card?

Yes, most card issuers will allow you to withdraw cash from your credit card. If you want to know whether you can take out a cash advance, you should contact the card issuer using the number on the back of your credit card, or you can figure this out by consulting your cardholder agreement.

3. Do cash advances hurt your credit score?

No, a cash advance will not hurt your credit score. That said, if you take out a cash advance and fail to make your credit card’s minimum payment, your failure to pay may hurt your credit score, but merely making a cash advance will almost never hurt your credit score.

4. How much cash can you withdraw from your credit card?

The amount of cash that you can withdraw from your credit card depends on the cash advance limit set by your card issuer. This number is different from one person to another. Most banks will show you the amount of cash that you can withdraw using your credit card on your online bank portal. If you don’t have access to the online portal, you can call the number on the back of your credit card and ask them how much cash you can withdraw. You should also take into account the maximum withdrawal limit from the ATM you’re going to use. Usually ATMs allow a maximum withdrawal of $800 to $1000 per day.

5. Can you transfer money from your credit card to your debit card?

Some banks will allow you to transfer money from your credit card to your checking account. After transferring money from your credit card to your checking account, you will be able to use the funds by using the debit card connected to your checking account.