What is a credit card cash advance limit?

A credit card cash advance is a way to access a portion of your credit line via cash withdrawal or, in some cases, a paper check provided by the issuer. The most common way to do a credit card cash advance is by making an ATM withdrawal. To do that, you will need to request a PIN from your card’s issuer.... read full answer

How a Cash Advance Works

When you take out a cash advance, you basically get a short-term loan by your credit card issuer. There are several ways you can get a credit card cash advance, each of which requires different steps.

• From an ATM: To get a cash advance from an ATM, insert your credit card and enter your PIN. Choose the cash advance option and enter the amount you want to withdraw. If you don’t have a PIN yet, you’ll need to request one from your credit card company.
• At a bank branch: You can also get a credit card cash advance at a bank branch. You will need to present your credit card and a government-issued photo ID to the bank teller, and tell them how much money you wish to borrow.
• With a cash advance check: Your issuer may send you cash advance checks automatically or you may have to request one. You can write the check out to yourself or someone else and once it processes, the transaction will appear on your credit card statement.

Why Cash Advances Should Be Avoided

Credit card cash advances should be reserved for emergencies only, as they are very expensive. Cash advance fees tend to be around $10, depending on the credit card company. The current average cash advance APR is about 21%. Cash advances also don’t get any kind of grace period, so they immediately start accruing interest.

A cash advance has no direct impact on your credit score, but it can affect your score indirectly. A cash advance raises your outstanding balance and, consequently, your credit utilization. As a rule of thumb, you should use less than 30% of your credit limit in order to avoid credit score damage. You should also pay your bill by the due date each month, which cash advances can make more difficult to accomplish by adding to your balance.

Alternatives to Cash Advances

If you find yourself in need of cash, you could avoid getting a cash advance by opting for some alternative options that have better terms.

• Borrow from family or friends: You can ask family or friends for a loan. This can be the most cost-effective way to get the cash you need. Just make sure you create a repayment plan.
• Apply for a personal loan: Personal loans usually offer better terms than a cash advance. You usually can pay back the loan at a fixed interest rate that’s much lower than the APR charged by credit card issuers.

When to Consider Getting a Cash Advance

Credit card cash advances should be avoided altogether, due to their high cost. However, a cash advance could be a reasonable option if you have an emergency need for money and limited resources for getting it. For example, a cash advance is usually a better option than a payday loan or a car title loan due to the exorbitant interest rates those loans typically carry.

Bottom Line

Although our world has been moving toward a cash-less society, there are still times when you might need to pay for something with cash. For those instances, it’s best to use a debit card or a prepaid card that lets you make free cash withdrawals from ATMs, whenever possible.

You can get cash from a credit card through rewards redemption or by doing a cash advance. Rewards are the better option because they actually save you money. Cash advances have very high fees and interest, so they’re more of a last resort than anything else. If you do get one, you’ll want to pay it back as quickly as possible.... read full answer

Here’s how to get cash from a credit card:

• Earn and redeem rewards: There are lots of cash back credit cards. Typically, they’ll give you at least 1% cash back on all purchases, and sometimes higher rates on specific categories of purchases.
• Do a cash advance: You can make an ATM withdrawal with your credit card to turn some of your available credit into cash. You just need to get a PIN from the card’s issuer. You can withdraw up to the “cash advance limit” listed on your statement. But cash advances are expensive – you can expect a hefty fee and a high APR that starts costing you right away. There’s no grace period.
  
  You can also get cash from a bank branch by presenting your credit card and a government-issued photo ID to the bank teller, or with a cash advance check sent to you either automatically by the issuer or by your own request.
  
  Store credit cards generally do not allow cash advances.
• At the register: Some credit cards don’t work like this, but the Walmart® Store Card, for example, allows you to withdraw up to $20 each time you make a purchase at a Walmart store location. This is also treated as a purchase, not a cash advance.

So, cash advances are not an attractive option, but there are a ton of attractive cash rewards credit cards on the market.