Can I Use a Credit Card at an ATM? How Cash Advances Work

John Ganotis

John Ganotis | Blog

Aug 24, 2016 | Updated Jun 21, 2017

You may be asking yourself “Can I get cash out of the ATM with my credit card?”

Yes! Most credit cards will let you get cash out at an ATM. Great news, right?

No way!

Withdrawing cash with a credit card is a cash advance. Cash advances usually come with very high costs. Even worse, they can signal to lenders that you’re being irresponsible with money.

Reasons why cash advances are a bad idea

  • Fee on the cash advance: You’ll usually have to pay a fee based on the amount of the cash advance. The terms for this fee are usually something like “Either $10 or 5% of the amount of each cash advance, whichever is greater.”
  • No grace period: With most credit cards, when you make a purchase you have until your next billing period is over before you start getting charged interest. But with cash advances, you start getting charged interest right away. Learn more about credit card grace periods here.
  • High APR: The APR on cash advances is usually much higher than normal purchases. Around 25% is not unusual. Remember, there’s no grace period. So you’ll start getting charged interest at this absurdly high rate immediately.
  • Bad sign for lenders: If your credit card company sees you’re using cash advances, you might get flagged as a risky borrower by their risk models. That’s because they know people use cash advances when they’re desperate. If they see you as risky, you might not be able to get higher lines of credit or good terms with that bank in the future. They might even decide to raise the interest rate on your card going forward, or cancel your account.
  • Reduced credit utilization: Cash advances will add to the balances that show up on your credit report. The higher your balances are compared to your total available credit limit, the worse your credit history is seen by credit scoring models. If you already have high balances on your credit cards compared to your credit limits, then cash advances can have a big negative impact on your credit scores.

Will my credit card work in an ATM?

Check the cardholder agreement that came with your card. If you see a Cash Advance APR and Cash Advances Fee, then you can probably get a cash advance with that card. It might look something like this:

terms and fees for cash advances

Check your statement. If you see a cash advance credit line or cash advance credit limit, that’s the maximum amount of cash you can take out. It’s important to know what this is so you don’t try to withdraw too much. The credit limit for cash advances is usually smaller than your credit limit for regular purchases.

credit line for cash advances

If you don’t have your credit card terms or a statement handy, you can call the phone number on the back of your card to ask if your account allows cash advances and the limit of your cash advance line of credit.

How do I get money from an ATM with a credit card?

You’re really still thinking of taking out a cash advance? Here’s how you can do it, but your future self will probably thank you if you don’t.

  1. Check to make sure your card allows cash advances. You can call the phone number on the back of your card to do find out.
  2. Make sure you know how much of your cash advance credit limit is available. You can usually see this on a statement, or you could call the phone number on the back of your card.
  3. Find or set your PIN. This may have come with your card when you received it in the mail. If not, you will probably have to request it from the issuer by logging into your account online or calling the phone number on the back of your card. It might take 7-10 days to get the PIN set up.
  4. Understand the terms and fees for cash advances on your card. Figure out when you’ll pay it back, and do the math to figure out how much extra money you will be paying for the cash you’re getting.
  5. Think about other options so you don’t really have to get cash out with a credit card.
  6. If you’ve decided to go through with it, find an ATM and withdraw cash with your card and PIN. You might also get charged a fee for using the ATM if it’s in a different network than your bank.
  7. Pay back the cash advance back as soon as you can. It will start accruing interest immediately, so if you don’t pay it back right away the debt could snowball out of control.

Example cash advance scenario

Let’s do the math for a hypothetical cash advance.

Here are the assumptions of this example:

  • you are doing the cash advance on the first day of your billing cycle
  • the Cash Advance APR of your card is 24.99% (this is a typical Cash Advance APR)
  • the Cash Advance Fee part of your cardholder agreement says “Either $10 or 5% of the amount of each cash advance, whichever is greater.”
  • you have a 30 day billing cycle
  • your credit card company compounds interest on cash advances daily

So, you withdraw $1,000 at an ATM with your card on the first day of your billing cycle.

Right away, you’ll get hit with that Cash Advance Fee. Since 5% of $1,000 is $50, and that’s greater than $10, you immediately owe $1050.

If you wait until the end of this billing cycle before paying any of it back, how much will you owe?

The APR is an annual interest rate. Since the APR is 24.99%, you can get the daily interest by dividing the APR by the number of days in the year: 0.25/365 is .00068, so the daily interest rate is 0.068%.

This means for every day that passes, you will be charged an additional 0.068% of the total amount you owe on top of what you already owe.

That may sound like a low percentage, but by the end of your first billing cycle you would owe a total of $1,070.90.

So, for that $1,000 of cash you withdrew, you ended up paying an additional $70.90 in interest and fees after only one month. That’s like 7 months of a Netflix subscription!

Q&A Video: What is the Cash Advance Credit Line?

Don’t just take my word for it. Here’s credit expert John Ulzheimer also telling you about why cash advances are a bad idea:

Extra Tip: Don’t pay ATM fees

I probably shouldn’t even tell you this here since we like to keep the focus on credit cards, but I do have a really good tip about using ATMs…

Charles Schwab has a special free checking account. They refund all ATM fees at the end of the month. If you ever get cash out of an ATM, this might be a checking account to consider.

I’ve been using this card for years. It gives me a certain satisfaction being able to take $20 out any ATM anywhere, no matter how high the fee, because I know I’ll be getting it back at the end of the month.

It’s connected to a brokerage account, but you don’t even have to use that.

This card won’t help you if you’re strapped for cash, but I figured I’d let you know about it since it’s silly to waste $2 or more to get out $20! Although that’s still low compared to the money you might be wasting if you use your credit card at the ATM.

Get a Balance Transfer Credit Card

If you’re having trouble paying your bills, you may be able to buy some time by transferring a balance. Read our guide first to make sure you understand the risks of doing a balance transfer, and make sure you have a solid plan for paying off debt before you do it. Then, if you decide a balance transfer might be right for you see our top picks or browse balance transfer offers on our partner’s site below.

Balance Transfer Credit Cards

  • Save money by transferring your existing balances to a card with a 0% introductory balance transfer rate.
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  • Double your savings with a card that has no balance transfer fee.
  • Save even more by looking for a card with no annual fee!
  • Terms vary by partner offer. Please see each bank’s application for terms and conditions.
  • Clicking Apply Now will take you to CreditCards.com to compare Balance Transfer cards from participating partners.

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