Understanding Credit Card Cash Advances: Fees & How They Work

Credit card transactions typically involve the electronic transfer of money from your credit line to the bank account of the business or vendor that accepted your card for payment. However, if you need some cash, you can also make cash withdrawals from your credit card account. Cash withdrawals are processed differently than electronic transactions and the fees that you pay for these transactions are often higher than for other transactions.

Cash Advance

You can make a cash withdrawal from your credit card account by going to a bank almost anywhere in the world and completing a cash advance. You must go to a bank that displays the logo of the payment processing company that processes your credit card transactions. You must give the bank teller your identification and your credit card and specify how much you want to withdraw as cash. You cannot withdraw your entire available balance in the form of cash; credit card issuers only allow you to access a certain percentage of your card balance through cash advances. Tellers swipe your card through a card reader, and it takes just a few minutes to receive your cash.

Automated Teller Machine

You can make a cash withdrawal by using your credit card at an automated teller machine and providing a personal identification number. Card issuers always send out PINs with debit cards, but you normally must request a PIN for a credit card. ATM withdrawals are subject to the same cash withdrawal limits as cash advances and some ATMs are programmed to limit cash withdrawals to a certain dollar amount per card, per day.

Checks

Credit card issuers often supply new card holders with credit card checks. People often use these checks to conduct balance transfers by using the checks to pay off balances owed on other cards. However, you can also write a credit card check to yourself and cash it at the bank that operates your credit card account. You can sometimes cash credit card checks at the bank that holds your deposit account, but only if you have enough funds in your deposit account to cover the amount of the cash withdrawal.

Considerations

When you carry a balance on your credit card, you must pay interest. Credit card companies charge a lower rate of interest on electronic transactions as opposed to transactions involving cash or credit card checks. Additionally, when you use an ATM, you may have to pay an ATM fee for using the machine if your credit card company does not operate that terminal. Most banks also charge a fee for processing cash advances, and you may pay a check cashing fee if you cash a check at a bank other than your own.