Credit cards can be used at ATMs to withdraw cash, making it a great way to get foreign currency while traveling abroad. Using your credit card like a debit card at an ATM is simple. First, check the fees so that you avoid any surprises. Then, set up a personal identification number (PIN) from your credit card provider, which can typically be done online through your account dashboard. With this PIN, you can now use your credit card as you would a debit card.
Can You Use a Credit Card at an ATM?
Yes, credit card providers allow it at ATMs. Most credit cards have a cash advance option which lets you withdraw funds from your credit line. However, it’s important to note that withdrawing cash from an ATM typically requires you to have a personal identification number (PIN) and if you don’t pay off your balance in full you will be charged interest. Get the step-by-step instructions on how to get a PIN for your credit card.
What is a Cash Advance?
You borrow money when you use your credit card at an ATM for cash withdrawal. Hence, a cash advance is a type of loan. There is a specific limit on the cash advance amount, which is overall lower than the credit line limit. It means you cannot retrieve more than this limit. To withdraw a cash advance from the ATM, you will need your credit card and its associated Personal Identification Number (PIN).
Considering the high Annual Percentage Rate (APR) and potential fees associated with cash advances, exploring alternative options for cash withdrawals is generally advisable, as the cash advance can burden you with loans and interests.
Reasons to Take a Cash Advance
It is always recommended to use alternative methods for cash withdrawal as they have many drawbacks. However, despite implementing high fees and interest rates, people still withdraw cash advances from the ATM as they get some benefits from it. Following are some reasons for which you can take a cash advance.
- You want to avoid carrying a debit card while traveling in case it gets lost or stolen.
- You are in dire need of a payday loan to complete some important task.
- You’re traveling overseas, and your credit card’s cash advance fee is cheaper than paying the currency exchange rate.
- Your debit card’s ATM withdrawal fees are the same as your credit card’s cash advance fee.
- You need cash but don’t have your debit card with you.
- You can take a cash advance when other loan services charge more interest than a cash advance.
- You need immediate cash before you get your next paycheck.
- You want to improve your credit card history. You can do it by withdrawing the cash advance and paying it back in a minimal time.
- You are in a situation where you don’t have any suitable alternative option for getting cash.
- You are unable to fulfill other loan applications due to poor credit history.
Reasons Not to Take a Cash Advance
Though cash advance is easy and quick money that can rescue you in many situations where you need immediate funds, it is not recommended to frequently use a credit card at an ATM for advance cash withdrawal as it has many disadvantages. The reasons why you should not take a cash advance are as follows.
- A hefty fee is deducted from each transaction depending on the money you withdraw.
- You must repay cash advances with a high interest rate–if you fail to pay off your balance in full.
- The interest is implemented from the day you withdraw the cash advance as it has no interest-free grace period.
- If you have borrowed enough cash advance, then in real emergencies, you won’t be able to withdraw more as you probably will still be paying the debt.
- Too much cash advance can trap you in excessive debt due to high interest rates.
- The credit card company can set a low cash advance limit of almost half of your credit limit, which lowers the amount of cash advance you can withdraw.
- You get a very short time to repay the cash advance.
- Credit card providers keep an eye on cash advance withdrawal, meaning frequent advance cash can put your credibility for further taking other loans at risk.
- Additional costs like ATM fees can further impact your financial resources.
- Relying too much on cash advances can bring financial instability.
Pros and Cons of Taking a Cash Advance
| Pros | Cons |
|---|---|
| Cheaper than getting foreign cash via a foreign currency exchange | Some credit card providers will charge a fee to use a credit card at an ATM |
| Immediate money in emergencies from any nearby ATM | Heavy interest rates are imposed from day one of withdrawal and can increase with time |
| A good option for travelers as a credit card is safer to carry than a debit card |
How Much Are Cash Advance Fees?
When you use your credit card at an ATM to withdraw a cash advance, three types of fees are imposed on you on every transaction, including ATM, transaction, and interest rates. Because of these three fees, the total is a big chunk of money which becomes difficult to bear. These charges vary depending on the type of credit card. You must pay a flat fee of 3% to 5% per transaction.
| Chase Sapphire | Citi Cards | Capital One Venture X | American Express | |
| Flat Fee | $10 per transaction | $10 per transaction | $3 per transaction | $10 per transaction |
| Percentage | 5% of the transaction | 5% of the transaction | 3% of the transaction | 5% of the transaction |
| Which Does It Use? | Whichever is greater | The minimum fee is $10 | Whichever is greater | Whichever is greater |
When considering whether or not to use your credit card at an ATM to withdraw money, it’s worth doing the math to confirm that its the more affordable option compared to using a money exchange. It’s also worth considering how much money you’re talking out of the ATM as it may be worth taking more money out rather than using the ATM numerous times during a trip.
How to Withdraw Cash From an ATM With a Credit Card
Withdrawing money with a credit card is a convenient method of obtaining cash. Ensure you have your credit card with you, and remember to create a Personal Identification Number (PIN) beforehand, as you can not withdraw the cash advance without it. Follow these simple steps below to pull cash advances from an ATM successfully.
- Get a PIN: Before you can use your credit card at an ATM, you must first get a PIN for your card. You can do this through your account dashboard with most credit card providers.
- Find an ATM: Look for an ATM that accepts your Master or VISA credit card. Going to the ATM of the credit card provider can give you potential fee discounts.
- Enter Your PIN: The ATM will ask for your associated Personal Identification Number (PIN), a four-digit numeric code, to verify your identity. Enter it to proceed with the process.
- Check Your Credit Limit: Before proceeding with the cash withdrawal, it is better to check your credit limit to determine the amount of cash you can get.
- Press The Cash Withdrawal Option: Once the ATM verifies you, it displays many options, out of which you have to choose “Cash Withdrawal” or related options like “Credit” or “Cash Advance.”
- Enter The Advance Cash Amount: Enter the amount you want to withdraw.
- Validate The Fees: The ATM can ask if you are OK with the transaction fees. Confirm that you agree to pay the fees, as the process can’t proceed without it.
- Confirm All Details: Review all the details that you have entered.
- Collect The Cash Advance: The final step is to collect the cash advance. It completes your successful cash withdrawal.
- Avoid Paying Interest: Pay off your credit card balance in full to avoid paying interest.
Bottom Line: Using a Credit Card at an ATM
A cash advance is a loan you withdraw with extra charges, which you must repay with a heavy interest rate. But it can save you in emergencies where you need instant cash to clear your bills. You can withdraw the cash advance via credit card from nearby ATMs. An ATM and flat transaction fees are deducted from every transaction, which can be too much for various users. Therefore, use it sparingly and keep it reserved for unexpected conditions. Exploring other alternative loan options can save you from serious interest amounts and financial consequences.
Frequently Asked Questions (FAQs)
What is the best credit card for using at an ATM?
The Capital One Venture X card is the overall best for travelers–particularly international travelers who are interested in saving money by getting cash via an ATM instead of from a cash exchange. The fee is $3 or 3%–whichever is greater, making it an affordable way of obtaining cash.
Do you have to pay interest on a cash withdrawal from a credit card?
Your standard cash advance interest rate applies when withdrawing cash from an ATM. However, if you pay off your monthly balance in full, you will not be charged any interest. For this reason, it’s advisable to use a credit card like a debit card in that you only use it when you have the money in the bank to cover your purchases. This way you never have to carry a balance, and thus don’t have to pay any interest.