Some people don’t know this, but your credit card isn’t just for making payments and buying things online.
You can actually get cash from your credit card.
The question is, how do you get cash from your credit card?
It’s pretty easy, actually. I’m going to share with you how to get money from your credit card today.
Getting Cash From A Credit Card
When you take money from your credit card, what you are doing is called a “cash advance”.
Cash advances exists to help people get extra money in times of need. Think Christmas, when bills need paid, or sudden loss of income.
Every credit card has a limit on how much money you can “borrow”.
When you take money from your credit card, you are taking a cash advance from the limit you have.
For example, if your limit on your credit card is $10,000, and your balance is $0, and you take a $200 cash advance, then you will have a remaining balance of $9800 to use on buying goods and services, or taking out more cash advances.
Steps To Get Cash From A Credit Card
Step 1: Visit an ATM that accepts your credit card
Step 2: Insert your card, enter your pin, and on the screen, select “cash advance” or something similar
Step 3: Enter the amount of money you wish to take out from your credit card
Step 4: Receive your money and take your credit card
Or, you can also visit your bank with your credit card and photo ID, and a teller will help you with your cash advance transaction.
An alternative way to borrow money from your credit card:
Many retailers also give you “cash back” when using your credit card at their stores.
When you pay for your items, you can request to get money back, even though you are paying with a credit card.
If you’re items cost $20 and you pay with a credit card, you can ask for $50 back, and you will receiver $50 from the cashier. The amount on your credit card statement will be billed at $70.
Hence, you are basically paying $70 for a $20 item, and receiving a $20 item + $50 cash.
What To Watch Out For When Borrowing From Your Credit Card
When you take money out of your credit card, you’re taking out a loan, just like when you make purchases with your credit card. However, cash advance interest rates are higher than regular credit card interest rates.
Generally speaking, there is no grace period for cash advances. If you take out a cash advance, you will pay interest on this loan. Therefore, borrowing money from your credit card is only advisable if you will be able to pay it back quickly, preferably in the same month that you borrowed it.
Each credit card company will have different policies and rates on how much money you can borrow from your credit card, and what the interest rate will be.
- Expect somewhere around 25% interest rate for cash advances against credit cards.
- You may be able to borrow around 50% of your credit limit as a cash advance (remember, each bank has their own policy/limits on this).
You will pay the interest on your cash advance every day until you completely pay back your loan against your credit card.
Also, if you were to get a cash advance at a retailer, retailers will most certainly have a limit on how much “cash back” you can get.
Just remember to spend money wisely on your credit card and don’t fall into the trap of borrowing a lot of money from your credit card and then have difficulty paying it back. The interest rate for cash advances are enormous and it adds up badly.