Can You Use A Credit Card At An ATM?

Last Updated on 06/12/2017 by GS Staff

Q:

Can you use a credit card at an ATM to withdraw cash?

A:

 The common use of a credit card is obviously swiping or inserting the card to pay for purchases or using it online at a retailer like Amazon. However, a credit card can also be used to withdrawal cash at an Automated Teller Machine (ATM) if it is permitted by the credit card lender. Many credit cards offer the ability to withdraw cash at an ATM.

Determine Your Cash Advance Limit

When you withdraw money from an ATM using your credit card, it is known as a cash advance. To determine if you are eligible for a cash advance, look at your latest credit card statement. It will often reflect the amount available for cash advance near the balance information. Your cash advance limit will be equal to your credit limit or in many cases less, depending on the terms set by your credit card company. You may need to contact your credit card company to see if you are eligible for cash advances if it is not clear on the statement.

Obtain A PIN

In order to use your credit card at an ATM, you need to obtain a personal identification number (PIN) like you would with a debit card. The PIN may have been established when you obtained your credit card or you may need to contact the credit card company to set one up. The PIN is usually a four digit number that you determine or is provide by the credit card company.

Withdraw Cash

Once you have a PIN assigned to your credit card, you can now use the card at an ATM to obtain cash. Simply insert the credit card in the machine and type in the PIN like you would with an ATM card. Select the withdraw cash option when prompted and the ATM will dispense the requested cash.

Cash Advance Fees & Interest

Taking a cash advance comes with a price for many credit cards. As soon as the cash is dispensed out of the ATM,  you may be issued a fee from the credit card lender. An example of a fee you might receive would be the greater of 3 percent of the withdrawal or $5. You may also be issued a separate ATM usage fee from the bank where you took the ATM withdrawal.

The interest rate charged on the cash advances is commonly much higher than the interest rate charge for everyday transactions. You will pay approximately 24 percent interest for cash advances compared to about 14 to 16 percent for purchase transactions. Be aware that the interest on cash advances may start immediately without a grace period like you would receive on purchase transactions. Furthermore, the credit card lender will likely apply your payment to the lowest interest items first until paid off before applying the payment toward the higher interest cash advance balance.

When To Use A Cash Advance

The fees and interest charged for cash advances can vary greatly. However, in most cases it can be an expensive burden to use your credit card to withdraw cash. You should consider using a cash advance only as an emergency back up when you are short on cash. It may be best to seek other ways to borrower cash other than through your credit card once you consider the fees and interest. This is especially true if you will not be able to pay off the cash advance quickly.