How to withdraw cash from a US credit card

If you regularly find yourself in front of an ATM, in an urgent need for cash, and discover that you took out a credit card rather than a debit or ATM card, there is good news and bad news for you. The good news is that you can withdraw money from a credit card. The bad thing is that you are unlikely to want to do this unless absolutely necessary.

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In terms of servicing many types of credit cards, an option of cash advances is provided, but as a rule, this also means high interest rates in addition to preliminary fees, writes Go Banking Rates. For example, the Chase Freedom credit card charges $10 or 5% of the transaction amount—whichever is greater—for each cash advance. This makes them a much more expensive option than an ATM card.

What do you need to know?

What is a cash advance

Every time you use a credit card, you essentially take a loan to make a purchase. In the case of a cash advance, you delete the purchase from this equation and receive cash directly. It may not make sense if you have money in your current account, but many simply have no choice, for example, if you need to reach your paycheck, but there is no money left.

How to withdraw cash from a credit card

Your options will likely vary depending on your credit card company, but the most common ways to get cash are through an ATM or a check. Contact your card issuer to obtain a PIN and use the card as you would any other card by entering the code at an ATM, or use cash advance checks.

One of the notable exceptions is the Discover “cash over your purchase” feature, available at some retailers using Discover cards. The feature essentially allows you to withdraw cash directly from the merchant when you make a purchase with a credit card. This means that if you fully repay the balance every month, you can, in fact, use this card as an ATM without a fee.

Pros and cons of cash advance

The most obvious advantage is convenience. There are often unexpected surprises in life when you may urgently need money. And having a plan B in such cases is a very useful thing.

But the total value of cash advances means that it is reasonable to consider them only as a last resort. As a rule, the use of advance funds carries with it large interest rates than a regular purchase, and the difference may be in 5% or more, plus the potential ATM fee.

In short, if you have no other option, credit card cash advances can be a very useful option that can help you get through a difficult financial period. But they're also an expensive alternative that can and should be avoided if you're working toward more effective personal planning and budgeting.

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