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Can You Use a Credit Card at an ATM? Will There Be Fees?

Can You Use a Credit Card at an ATM? Will There Be Fees?

Have you ever wanted to draw cash at an ATM but discovered that you only have your credit card at hand? Have you ever needed more cash than what was in your account and wondered if you could borrow from your credit limit instead? Whatever the circumstances, you might be asking whether it’s even possible to use your credit card to get cash at an ATM.

Here’s the deal:

Most credit card companies do allow ATM cash withdrawals. However, the transaction will appear as a credit card charge instead of a withdrawal from your bank account. While it’s a simple transaction, there are several downsides to consider, including high fees and negative credit score implications.

Although the 2021 Consumer Credit Market Report published by the Consumer Financial Protection Bureau (CFPB) indicates that credit card cash withdrawals have been declining year on year (currently totaling around $3 billion every quarter), many people still don’t consider the impact of such a transaction. Fortunately, you’re no longer going to be one of them. In this post, we’ll cover everything you need to know about using your credit card at an ATM and what to expect.

black woman atmCan You Withdraw Money From Atm With Credit Card?

As mentioned, most credit card providers do give cardholders the ability to take out cash at nearly any ATM. This type of financial transaction is often referred to as a credit card cash advance. It simply means that you’re purchasing cash from your credit card company instead of buying an item from a store.

Most general-purpose credit cards have a cash advance feature that allows consumers to get cash or cash equivalents using a portion of their credit card limit (usually around 20%). It’s important to note that a cash advance will only be available to cardholders with sufficient cash available in their line of credit. In other words, you won’t be able to draw out $1,000 if you only have $700 available on your card.

Although an ATM withdrawal is the most well-known form of a cash advance, they’re not the only one. Some card issuers treat certain purchases as cash advances, including purchases of prepaid cards, gift cards, foreign currency, virtual currency, traveler’s checks, convenience checks, gold at a bank, and chips at a casino.

If you link your credit card to a deposit account to cover potential overdrafts on the latter, your card issuer may also treat that overdraft amount as a cash advance. Unfortunately, all of these transactions will have the same negative repercussions as withdrawing cash from an ATM, so you should know what you’re getting into when making these purchases.

Before we dive into credit card cash advance fees and other aspects to consider, let’s take a quick look at how it works.

How Can You Withdraw Cash From A Credit Card At An Atm? 

Prior to going to an ATM, you should check your latest credit card statement to ensure you have sufficient funds left in your line of credit. Depending on your issuer, this can be based on your card’s spending limit or a preset cash advance limit. If you’re unsure about the amount still available, contact your credit card company to confirm.

Using your credit card to get money from an ATM is a fairly simple process. In fact, it’s a lot like using your debit card—only with a few slight differences.

Here’s what the process typically looks like:

  1. Insert your credit card into an ATM
  2. Enter the card’s PIN
  3. Select either “cash withdrawal” or “cash advance” when the transaction options appear
  4. If asked to select between debit, credit, or checking, select “credit.”
  5. Enter the monetary value you wish to withdraw (it shouldn’t exceed your available limit)
  6. Acknowledge that you accept all associated transaction fees (this may include ATM transaction fees and cash advance fees)
  7. Complete the transaction and wait for the ATM to release your cash

That’s it! You’ve successfully drawn money from your credit card.

How Much Does It Cost To Use A Credit Card At An Atm? 

As with most transactions, there will be fees involved. However, you should note that credit card cash advances also carry high-interest rates and can affect your credit score.

The cost structure of cash advances can be complex as it depends on the amount advanced, interest rates, upfront fees, and the timing of repayment. With that said, let’s break down the costs and what you can expect when conducting this type of transaction.

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1. ATM Fees

Like debit cards, credit cards are connected to a particular network of ATMs. This is based on the card issuer. While you can withdraw cash from your credit card at almost any ATM, using an ATM outside of your issuer’s network may incur a fee.

In addition, businesses like restaurants and convenience stores that allow ATMs to operate on their premises may charge consumers who use the ATM an additional fee, which is deducted from the user’s bank balance. These fees can push up the cost of the transaction by several dollars, making credit card cash advances more expensive.

2. One-Time Cash Advance Fees

Even if you don’t incur an ATM fee, your credit card company will charge you a cash advance fee every time you draw money using your credit card at an ATM. You’ll need to check your credit card terms and conditions to find out how much this fee will be, as credit providers (by law) have to stipulate how much certain transactions will cost you.

Fees for drawing cash from a credit card are typically 3% to 5%. Therefore, if you request $500, you could pay anywhere from $15 to $25 for your cash advance. Some card issuers charge a flat rate. However, this can make the transaction even more expensive as you’ll be paying the same fee for drawing out a small amount as you do for drawing out a large amount.

As you can no doubt surmise, a one-time cash advance fee plus an ATM fee can quickly add up. Unfortunately, these aren’t the only costs you’ll need to worry about.

3. High Interest Rates

Cash advance interest rates tend to be quite a bit higher than those for regular purchases. The annual percentage rate (APR) on a cash advance transaction typically ranges from 17.99% to 29.99%. This is around 4% to 5% higher than if you make a normal purchase on your credit card.

Additionally, most credit card companies don’t offer an interest-free grace period on cash advances, meaning that interest will start accruing immediately. For example, if you use your credit card to purchase a new piece of furniture or stock up on groceries for the month, you may not have to pay interest on these purchases for anywhere up to 56 days, depending on what your credit card agreement entails. With a cash advance, your APR will kick in from the moment you collect your cash from the ATM.

If you carry a credit card balance from month to month, you’re at even greater risk for the exponential growth of your debt obligations—especially if you don’t pay off your cash advance balances quickly.

ATM handHow Does Drawing Cash From Your Credit Card Affect Your Credit Score? 

Besides the fees and high-interest rates associated with credit card cash advances, you should consider how this type of transaction might impact your credit score and creditworthiness.

First, drawing from your available credit limit will increase your credit utilization ratio (CRU). Your CRU refers to how much credit you’ve used versus your total credit limit available. Using your credit card to get cash means you’re using more of your total limit. Experts recommend that your CRU doesn’t exceed 30%. Anything higher could cause a drop in your credit score.

The second way it can negatively impact you is by making you look like a bigger credit risk. Since people usually only request cash from a credit card when they don’t have enough in their checking account to cover expenses, lenders tend to view cash advances undesirably. This is especially true if you’re not paying your credit card balance in full each month.

Keep reading: Do Credit Cards Have PINs? Do They Need A PIN?

So, Can You Take Out Money From A Credit Card?

As discussed in this post, the simple answer is yes. Whether you should is debatable. Although a credit card cash advance is easy to obtain, requires no paperwork, and gives you a way to get quick cash, the reality is that it can be incredibly expensive if you’re not careful.

If it’s your only option, you can minimize your risk by paying off the amount you withdrew as quickly as possible. Also, make sure you know exactly what fees are involved before you even take a trip to an ATM. You don’t want to get hit by a nasty surprise when your credit card bill arrives.

The more you know about credit card cash advances (drawn from an ATM or otherwise), the better equipped you’ll be to decide whether it’s worth it. Alternatively, you could always borrow money from family or friends or take out a small personal loan to cover your immediate needs. Whatever you decide, have a plan in place to pay back your debt.

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