How do I get cash from my credit card?
Whether it’s because money is tight or just out of curiosity, consumers sometimes wonder how to get cash from a credit card. You can use a credit card for most purchases, but there are also bills that can only be paid in cash.
Most credit card companies allow you to withdraw cash with your card. This feature is called a cash advance from a credit card and is similar to taking out a loan under your credit limit. There are a few notable downsides, most notably high interest rates and fees, so it’s generally not recommended if you have other options.
In this guide, we’ll go over how cash advances work in case you ever need to use them, and then we’ll cover some of the other options you may want to consider first.
How to get cash from a credit card
Here’s how to get cash from your credit card through an ATM:
- Put your credit card in the ATM.
- Enter your credit card PIN.
- Select the “cash loan” option.
- Select the amount of cash you want.
- Confirm the transaction.
An ATM is usually the easiest way to get a down payment and the process is similar to how withdrawing a debit card works. However, you will need a credit card PIN to use this method. If you don’t have one or the card doesn’t come with a PIN, you can contact your card issuer to set it up.
Before you receive a cash loan, confirm that your card offers this feature and check its limit. Credit cards have a separate cash advance limit which is less than the credit limit.
Here are some other ways to get cash advances:
- Ask your card issuer for a convenience check. These are checks that you can write out and are associated with your credit card account.
- Purchase a money order with a credit card.
- Transfer money to yourself via a money transfer service such as Western Union and pay with a credit card.
Please note that neither of these options will work around your cash advance fees. As they are still considered cash advances, they have the same disadvantages.
Disadvantages of a cash loan from a credit card
Credit card cash advances have three significant disadvantages:
- Include fees. These fees are typically around 5% of the transaction amount with a minimum of $ 10.
- They have high interest rates. Most credit cards have a separate APR (interest rate) specifically for cash advances. The APR of a cash down payment is almost always higher than the APR of a purchase, and many cards charge around 25%.
- Interest charges start immediately. While purchases have a grace period before interest is charged, cash advances do not. The card issuer will start charging you interest immediately.
To put all this from a different perspective, let’s break down the typical $ 1,000 cash advance costs. The fee would immediately cost $ 50. Immediate interest is also charged. At 25% APR, one month will add approximately $ 21 in interest.
Learn more: How does the credit card interest rate work?
That’s a total of $ 71 in fees and interest, assuming you pay your down payment within a month. If you need more time then the down payment APR will cost you more.
Cash advances may be the best option in an emergency. They are certainly better than borrowing money from a predatory lender such as a lender that charges very high interest rates.
But before you decide on this option, it’s worth checking to see if any alternatives work for your situation. There are applications that offer a free cash loan without checking your creditworthiness. Or, you can potentially get money from your credit card without paying any down payment or interest.
Other ways to get cash from a credit card
Depending on what you need money for, you can get cash from your credit card and process it as a purchase, not a cash advance. Here are the best ways to do it.
Buy prepaid gift cards
A popular method is to use a credit card to purchase a prepaid gift card and then use the prepaid card to purchase a money transfer. Some websites and stores sell these cards for a small fee, such as $ 5.95 for a $ 500 gift card.
The difficult part is buying money order. Not every retailer will let you buy a money order with a prepaid card, but many large retailers and grocery stores do. After receiving the money transfer, you can become the recipient and convert it to cash.
To see an example of how this works, imagine you’re using a credit card to buy a $ 500 prepaid gift card. Including the fee, it costs $ 505.95. Then you buy a money order which costs around $ 1.
You’ll get $ 499, and one purchase for $ 505.95 was enough. This is a small price to pay, and since it was a purchase, you will not be charged an APR cash advance. With rewards credit cards, it is even possible to break even or stay ahead in terms of fees due to the rewards earned on the purchase.
Send money with the payment app in exchange for cash
Some of the best payment apps let you send money to family and friends using a credit card for a fee, which is usually 3% of the transaction. You can do this with the following applications:
If you know someone who doesn’t mind helping, you can pay them through the app and ask them to pay them out for you. For example, you send your best friend $ 300 through Venmo and then he withdraws $ 300 from his bank account to pay you back. With a 3% credit card fee, it would cost $ 9.
Technically, this is not the way these payment apps should be used as they are not intended for cash advances. But that’s unlikely to happen when you’re sending money to someone you know first, especially if it’s a one-time thing.
Pay your bills with Plastiq
Plastiq is a service that allows you to pay almost any bill with a credit card. How it works is simple:
- At Plastiq, you provide information about the recipient and the amount you pay them.
- You can pay by credit card for 2.85% of the fee.
- Plastiq then sends the money to the recipient as a check or ACH transfer, whichever you choose.
- You can also make a transfer via Plastiq, although there is an additional fee.
Although Plastiq does not allow you to send money to yourself, you can use it to pay bills that do not accept credit card payments. Many people use it to pay off their rent or mortgage.
Even though credit cards aren’t meant to be a way to get cash, you can use them in no time. Whichever method you choose, make sure you borrow only as much as you need and try to pay off as quickly as possible.