Using a credit card to withdraw cash from an ATM may seem like a convenient solution during emergencies or while traveling, but this feature comes with important financial implications. Understanding the benefits and drawbacks of this option can help you decide when and how it might be appropriate.
A cash withdrawal using a credit card, also known as a cash advance, allows cardholders to access physical currency from an ATM or bank using their available credit limit. Unlike regular card purchases, cash withdrawals are treated differently by card issuers and are subject to unique conditions and costs.
Advantages of Cash Withdrawals
In urgent situations where card payments are not accepted—such as small vendors, remote areas, or during service interruptions—a cash withdrawal provides quick liquidity.
If you don’t have direct access to a checking account or debit card, using a credit card for cash may be your only alternative.
In some destinations, digital transactions may be limited. Having the ability to access funds via ATM ensures greater flexibility and purchasing power.
Cash withdrawals usually incur a transaction fee, often calculated as a percentage of the withdrawn amount or a flat charge—whichever is greater. This fee is applied each time you withdraw.Unlike purchases, cash advances typically do not benefit from a grace period. Interest starts accruing immediately from the moment the cash is dispensed, often at a higher rate than regular transactions.
The available amount for withdrawal is often less than the full credit limit. Some issuers set strict caps on cash advances, which may be insufficient for large expenses.Most card programs do not provide points, miles, or rebates on cash advances. As such, there’s no additional benefit beyond access to funds.