Many credit cards allow their users to get cash from them. If you are thinking of getting cash from a credit card, you may be wondering how to do so. The process is pretty straightforward, but there are some things you need to know about credit cards before you decide to withdraw cash from them. Here is everything you need to know about the cashing process with credit cards.
Is Cash Back the Same as Getting Cash From Your Credit Card?
Before you move forward with getting cash from your credit card, it will be helpful to understand the distinction between cash back and cash withdrawals. Because these two processes sound similar, many people get them confused with one another. Getting cash back from your credit card is not the same as getting cash from your credit card.
Cash back is a reward that your credit card issuer may have. With this, if you spend a certain amount, shop at a specific retailer, or meet similar conditions, you will credit back on your credit card statement, which you can use similarly to cash. In most cases, you can use this “cash” by transferring it to your checking account, buying a gift card, or using it to pay off your credit card.
Getting cash from your card involves borrowing from that limit and has nothing to do with credit card rewards.
Where Can I Find a Credit Card?
If you don’t already have a credit card you can withdraw money from, and you want to move forward with a credit card cash advance, you will have to apply for one.
You can find credit cards with banks, credit unions, retailers, and online lenders. Online lenders and retailers may be more flexible than financial institutions like banks or credit unions. And so, if you are applying for a credit card with bad credit, start with those options. If you still cannot get approved for a credit card, consider adding a cosigner or co-borrower to your credit card application.
To apply for a credit card, you’ll need a government-issued photo ID, proof of income, proof of residency, and your social security number or TIN (tax identification number). You’ll also need to complete a formal application with the credit card companies you are applying with.
To find the best credit card for you, apply for pre-approval with a handful of lenders and compare credit card limits, interest rates, cashing factors, rewards, and the lenders themselves. By looking at all these factors you can rest assured that you are finding a credit card option that works best for you.
A Step-by-Step Process on Getting Cash From a Credit Card
If you want to move forward with getting cash from a credit card, you will need to go through these steps:
Step 1: Figure Out What Credit Card You Want To Use
The first step is to figure out what credit card you want to use for cash back. Most people have a few cards they can use, so comparing their cashing availability is a good idea before deciding. You should pay attention to your cashing limit, whether there are any fees, and the interest rate applied to that transaction.
Step 2: Head To a Place You Can Use Your Card
Once you know which credit card you want to use to get cash, your next step is to head to an ATM, a branch/store of your credit card issuer, or purchase something at a retail location. You’ll need your credit card, sometimes an ID, and you need to know your zip code.
When using an ATM, double-check to make sure that they accept your credit card type, and then place the card in there. When getting cash back after a purchase, simply buy something for a cash back option. And finally, the least common way of getting cash back is to head to a location for the issuer, for example, if you have a credit card with a bank, you can head there and talk to a teller.
Step 3: Move Forward With the Prompts To Get Cash
Once you are where you need to be, all you have to do is follow the prompts on the machine. With an ATM and a store purchase, it will be similar to when you withdraw cash from a debit card. Simply select the cashback prompt and then select or enter how much money you want to withdraw.
Step 4: Get Cash and Use It
Once your transaction is over, someone will hand you the funds, or they will be dispensed automatically. From here, take your cash and use it as you need.
Step 5: Repay the Cash You Borrowed
And finally, once you have used your cash, don’t forget about having to pay it back, that cash withdrawal will be added to your credit card statement and you can pay it off monthly.
And so, as you can see, getting cash from a credit card that you already have is pretty straightforward. If you don’t have a credit card you can use immediately, you can apply for a new one.
Some Drawbacks and Things to Consider When Getting Cash from a Credit Card
Credit card cash advances can definitely be convenient if you already have a credit card and need fast cash; you don’t have to go through an application and wait for approval. And it is relatively easy to do so. However, it would be best to consider potential downsides and a few other variables before getting cash from your credit card.
Your Credit Utilization Change
Your credit utilization is the ratio that measures your available credit against the amount of debt you have. When you borrow cash from a credit card, you will be impacting your credit utilization in the two ways possible: your available credit and credit usage. If your credit utilization exceeds 30%, it can hurt your credit scores. And so, if borrowing cash from your credit card raises your credit utilization above 30%, you may want to reconsider.
Interest Rate on a Credit Card Advance Is Usually Higher Than Using Your Credit Card
When borrowing cash from a credit card, the interest rate will be higher than if you were to use your credit card as a credit transaction. And that cash withdrawal will start accruing interest immediately. So, familiarize yourself with your card’s interest charges/APR so there are no surprises. Another thing to be mindful of is that you may have ATM fees that will be charged to your credit card.
The Due Date on Your Cash Advance
Another thing you need to keep in mind with a credit card cash advance is the due date on your credit card bill. In most cases, your cash advance amount will be added to your credit card statement, and you will have to pay it back like you would with a regular credit transaction. As mentioned above, credit card companies will have higher cash advance interest rates.
Being Aware of the Cash Advance Limit
Your credit card company will give you a credit limit on both your credit card transactions and your cash advance. And so, before you withdraw cash from your credit card, make sure you know your limit.
There May Be Cash Advance Fees
When withdrawing cash, there may be a few cash advance fees you will have to pay, while other cash advance fees may be avoided. For example, there may be an initial Cash advance fee and then if you miss the due date there may be an additional charge that you will have to pay.
Alternative Options to Credit Card Cash Advances
A credit card cash advance isn’t your only option if you have to cover expenses. Personal loans are a great option if you need cash quickly and don’t have the best credit. You can find personal loan lenders online, with banks and credit unions. Once approved, the funds can be sent straight to a bank account and withdrawn as cash with your debit card.
Another thing you can consider is simply using your credit card as a credit transaction for your expenses. With a credit transaction, you likely will have more money you can use, less interest, and fewer fees to pay. And so consider that option instead.
One last thing to consider if you need a few hundred dollars in cash is to get a side hustle. There are many jobs that can mean quick cash and flexible hours, like dog walking, grocery delivery, or ridesharing. If you have the option to borrow from friends or family, you may want to consider it—there likely won’t be any interest due on that, and flexibility with repayment. However, borrowing money from friends and family may get complicated.