Many credit card issuers allow you to make an ATM withdrawal using your credit card, in a process similar to what you would with a debit card.

What is a Credit Card Cash Advance?

Credit card cash advances are an easy way to get cash when you don’t have access to your checking account or you don’t have enough funds in your checking account. Since you’ve already been approved for a specific credit limit, you don’t have to get your credit card issuer’s permission before you can take out a cash advance. If you borrow money from a friend or family member, you’ll have to pay it all back at once.

When you take out a cash advance on you credit card, you can repay the money at your convenience. As long as you make your monthly minimum payments, your card will remain in good standing with your credit card issuer.

How Much Can You Take Out With a Cash Advance?

You may not be able to withdraw up to your full credit limit. Your credit card issuer will likely set a lower cash advance limit. If you’re already carrying a balance on your credit card, your cash advance limit will be even lower. If you’re interested in taking out a cash advance, check your online account or call your credit issuer to see what credit you have available for a cash advance.

The Cost of Taking Out a Cash Advance

When you make a cash withdrawal with your debit card, you’re withdrawing money directly from your checking or savings account. The result of this withdrawal is a decreased account balance. If you use an ATM that is outside your bank’s network, you’ll pay an ATM fee to your bank, the ATM operator, or both in some cases. Overall you would be looking at an extra few dollars at the most. Credit card cash advances are not quite that simple.

A credit card cash advance, on the other hand, charges fees on top of the ATM fees you’d pay with a debit card ATM withdrawal. The card lender issuer will charge a cash advance fee, which will be either a flat fee or a percentage of the withdrawal amount. A typical cash advance fee is 5% of the withdrawal amount, which means, for example, you would pay a $15 fee on a $300 cash advance. It may not sound like much, but remember that you’re paying the fee on top of repaying the money you’ve borrowed.

Cash advance transactions also charge a higher interest rate than other transactions. The cash advance won’t have a grace period during which you can pay your balance in full and avoid paying interest. Instead, you’ll start accumulating finance charges from the beginning. If you don’t have a plan for paying back the cash advance, this can quickly become a very, very expensive way to borrow money.

Other Transactions May Be Treated Like Cash Advances

Credit card issuers occasionally send checks that you can use for purchases or you can fill out the check and use it to get cash. When you use these checks for purchases or cash, the transaction is treated just like a cash advance. There are a few other types of transactions your credit card issuer may treat as a cash advance. This includes overdraft protection cash advances and cash equivalent transactions like wire transfers or the purchase of money orders.

Staying Away From Cash Advances

There are much better ways to get the money you may need on short notice. If you don’t specifically need cash, a cash advance would be best to avoid. If you find yourself in need of a large amount of money on short notice, try to find more cost effective ways to do so like applying for a credit limit increase or a personal loan. At least in those cases you are able to get a more reasonable interest rate and you won’t have to worry about fees. They are not ideal, but they are better alternatives to cash advances.

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