Is It a Good Idea to Withdraw Cash on Your Credit Card?

  • Money Pug can help you to manage your financial affairs and find the credit cards and other financial products that are right for you. But Money Pug also wants to help you to use such products responsibly. This guide explains how to withdraw cash on your credit card and discusses whether it is ever a good idea to do so, as well as offering some alternatives that could get you out of a tricky situation and get your books back into the black.

Can I Withdraw Money With My Credit Card?

  • You can withdraw money with your credit card. However, it is worthwhile remembering that it can be very expensive to do so, and so it is something that should almost always be avoided if at all possible.


How Can I Withdraw Money With My Credit Card?

  • You can withdraw cash on most credit cards in the following ways:

    1. By using an ATM (cash machine).
    2. By going to a branch of your credit card provider and withdrawing cash over the counter.
    3. By getting cashback when you pay for something in a shop. (Though most retailers will only offer this when you are using a debit card.)

Can I Withdraw Money With My Credit Card Without A Fee?

  • Yes, some providers will allow you to withdraw cash from your credit card without paying a fee. However, you should remember that even when a fee is not charged, you will still have to pay interest on the amount that you withdraw.

What is a Cash Advance?

  •  A cash advance is merely another term for withdrawing cash on your credit card. Some credit card companies will also count other transactions as cash advances, such as:

  1. Buying travel money or traveller’s cheques.
  2. Making a payment on your mortgage.
  3. Making payments for your utility bills.
  4. Purchasing gift vouchers.
  5. Betting or gambling (such as buying lottery tickets or spending in a casino).
  6. Writing credit card cheques. (Blank cheques issued by some credit card companies for you to pay with).

  • It is important to establish with your provider which transactions they deem as being cash advances, as you will be charged the same for these transactions as you would be for withdrawing cash on your credit card.


What Will a Cash Advance Cost?

  • Most credit cards will charge a fee for cash advances. Often, this is a percentage of the amount that you take out. This is typically around 3%, so if you withdrew £100 this would cost you £3. There is usually also a minimum fee, so you could end up paying £3 still, even if you only withdraw £10. While there are few cards that have no fee at all, some have a much higher fee than others – charging 5% on cash withdrawals, with a minimum fee of £5, for example.

It is also worth noting that the APR (interest rate) on cash advances is usually higher than the interest charged on making purchases. It can often be significantly higher. You will usually be charged interest on the amount that you withdraw from the day you take it out until you pay off the balance.

Of course, if you do not repay the amount in time by the date it is due, you are likely to incur fees, as well as even more interest. If you are not careful, the debt can mount quickly.


Will Getting A Cash Advance Affect My Credit Rating?

  • Yes. Cash advances will appear on your credit record. Other lenders will be able to see this information when you apply for credit with them. While a cash advance on your record will not necessarily make it more difficult to borrow, some might think that withdrawing cash on your credit card is a sign that you have struggled to handle your finances, and it may be a black mark. Avoid cash advances if you want to make sure that you are not going to put off potential lenders in future.


How Much Cash Can You Withdraw?

Cash advances on your credit card will usually be limited by the following factors:

  1. A minimum withdrawal amount (usually £10).
  2. A daily withdrawal limit (usually between £100 and £500)
  3. A weekly or monthly limit (sometimes capped at, for example, £500)
  4. A total advance limit (a percentage of your total credit limit available for cash withdrawals. For example, if you had a 50% advance limit, and a credit limit of £2000, you would be able to have no more than £1,000 of cash advances on your balance at any point in time).

How Can You Save Money on Cash Advances?

  • Cash advances can be expensive. Here are some ways to save money on making cash withdrawals:

    1. Repay as soon as you can.
    2. Get all the cash you need in one go, not multiple transactions.
    3. Choose a card with low (or no) withdrawal fees.
    4. Choose the right credit card if you plan to withdraw cash abroad.
    5. Consider the alternatives for freeing up some cash.

What Alternatives Are There?

  • If at all possible, it is usually best to avoid withdrawing cash on your credit card. Instead, you could consider:

  1. Use your debit card instead if possible. Consider looking for a bank account with a free to use overdraft for emergencies.
  2. Transferring money from your credit card to your bank with a money transfer. Money transfers usually incur a transaction fee, but this will often be lower than the fees and interest of a cash advance.
  3. Consider borrowing money from family or friends for an emergency situation.

Money Pug can help you find the best solutions for managing your money, and help you to balance your budget.

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