You probably use your credit card to make purchases on credit, which you pay off with cash each billing cycle. But if you need cash in a pinch and your bank account is bare, you can also use your credit card to get cash. It’s called a cash advance.
One of the quickest ways to get cash from your credit card is simply to withdraw money from an ATM. You’re essentially borrowing against your line of credit when you do this, but you’ll pay extra fees to get the cash, including a cash advance fee from your credit card issuer as well as a potential fee from the ATM.
You’ll also pay a higher interest rate for a cash advance than you would for a purchase, and you won’t get the grace period you get with purchases. This means you’ll start accruing interest as soon as you get the cash advance.
To get a cash advance, you’ll need to enter your four-digit personal identification number (PIN). Alternatively, you can go to a bank to withdraw the money, which would only require showing your photo ID instead of using a PIN.
Convenience checks are issued by your credit card company and draw against your credit line instead of your checking account. Just like a regular bank check, you fill in the name of the party you want to pay along with the amount.
If you just need cash, you can make the check out to yourself and cash it, or you can deposit it in your bank account. As with a cash advance, you will not only pay a fee for using them but also a higher interest rate on the balance than you would for conventional purchases.
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Some card issuers limit cash advances to a percentage of your total credit line per withdrawal or per day, either by restricting you to a dollar amount or to a percentage of your credit line.
You may think of credit cards as a way to conveniently make purchases at your favorite retailers without carrying around a lot of cash. However, you can also use them to get cash immediately if you need it.
You’ll pay for the privilege of getting cash from your line of credit in both extra fees and a higher interest rate, meaning cash advances are best for emergency situations. In addition, you may be limited in how much cash you can get, so getting cash from a credit card is primarily a short-term solution for when you need cash quickly.