Whether it’s because money is running out or just out of curiosity, consumers sometimes wonder how to get money with a credit card. You can use a credit card for most purchases, but there are also bills that can only be paid with cash.
Most credit card companies allow you to withdraw money with your card. This feature is called a credit card cash advance, and it’s like taking out a loan against your credit limit. There are a few notable drawbacks, especially high interest rates and fees, so this is generally not recommended if you have other options.
In this guide, we’ll go over how cash advances work in case you need to use one, and then go over some of those other options you might want to consider first.
How To Get Money With A Credit Card
Here’s how to withdraw money from a credit card through an ATM:
- Insert your credit card into the ATM.
- Enter your credit card PIN code.
- Choose the âcash advanceâ option.
- Select the amount of money you want.
- Confirm the transaction.
An ATM is usually the easiest way to get a cash advance, and the process is similar to withdrawing by debit card. However, you must have your credit card PIN code for this method. If you do not have it or if your card does not come with a PIN code, you can contact the card issuer to configure it.
Before getting a cash advance, confirm that your card offers this feature and check its limit. Credit cards have a separate cash advance limit that is lower than the credit limit.
Here are some other ways to get cash advances:
- Ask your card issuer for convenience checks. These are checks that you can write that are linked to your credit card account.
- Buy a money order with your credit card.
- Transfer money to yourself through a money transfer service, such as Western Union, and pay with your credit card.
Keep in mind that none of these options will bypass the cash advance fee. Since they are still considered cash advances, they have the same drawbacks.
Disadvantages of a credit card cash advance
There are three major drawbacks to credit card cash advances:
- They include the costs. These fees are generally 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 cash advance APR is almost always higher than the purchase APR, with many cards charging around 25%.
- Interest charges begin immediately. While purchases have a grace period before earning interest, cash advances do not. The issuing company will immediately begin charging you interest.
To put all of this in perspective, let’s break down the typical costs of a $ 1,000 advance. The fee would set you back $ 50 upfront. There are also the immediate interest charges. At 25% APR, a month would add about $ 21 in interest.
Learn more: How does credit card interest work?
This works out to a total of $ 71 in fees and interest, assuming you repay the cash advance in one month. If you need more time, that cash advance APR will always cost you more.
Cash advances can be your best option in an emergency. It is certainly better than borrowing money from a predatory lender, such as a payday lender who charges extremely high interest rates.
But before you go for this option, it’s worth seeing if any alternatives work for your situation. There are apps that offer free cash advance without a credit check. Or, you could potentially get money off your credit card without paying cash advance fees and interest.
Other ways to get money with your credit card
Depending on why you need the cash, it may be possible to get cash with your credit card and have it treated as a purchase, not a cash advance. Here are the best ways to do it.
Buy prepaid gift cards
A common method is to use a credit card to purchase a prepaid gift card and then use the prepaid card to purchase a money order. Some websites and stores sell these cards for a small fee, such as $ 5.95 for a $ 500 gift card.
The tricky part is buying the money order. Not all merchants will allow you to purchase a money order with a prepaid card, but many large retailers and grocery stores will. Once you have the money order, you can make it the recipient and convert it to cash.
For an example of how this works, imagine using your credit card to purchase a $ 500 prepaid gift card. With fees, it costs you $ 505.95. After that, you buy a money order, which costs around $ 1.
You end up with $ 499, and all it takes is a purchase of $ 505.95. This is a small price to pay, and since this is a purchase, you are not charged the cash advance APR. With rewards credit cards, it may even be possible to break even or get a fee advance due to the rewards earned on the purchase.
Send money with a payment app in exchange for cash
Several of the best payment apps let you send money to family and friends with a credit card for a fee, which is typically 3% of the transaction. You can do this with the following apps:
If you know someone who doesn’t mind helping you, you can pay them through an app and ask them to withdraw the money for you. For example, you send your best friend $ 300 through Venmo, then he withdraws $ 300 from his bank account to pay you back. With a 3% credit card fee, that would set you back $ 9.
Technically, this is not how these payment apps are meant to be used, as they are not intended for cash advances. But it’s unlikely to be a problem when you send money to someone you know first, especially if it’s a one-time transaction.
Pay your bills with Plastiq
Plastiq is a service that allows you to pay almost any bill with your credit card. How it works is simple:
- On the Plastiq website, you provide the recipient’s information and the amount you pay them.
- You can pay by credit card for a 2.85% fee.
- Plastiq then sends the money to the recipient as an ACH check or wire transfer, whichever you choose.
- You can also ask Plastiq to wire the money, although this comes at an additional cost.
Although Plastiq does not allow you to send money to yourself, you can use it to cover bills that do not accept credit card payments. Many people use it to make their rent or mortgage payments in this way.
Even though credit cards aren’t meant to be a way to get money, you can use them like that in a pinch. Whichever method you choose, make sure you only borrow what you need and try to pay it back as quickly as possible.