August 17, 2022
Credit cards are a popular payment method, but cash withdrawals are a different story altogether. You may be wondering: can you withdraw cash from a credit card, and if so, how much?
In this article, we’ll provide the answers to these questions and all the pertinent information on withdrawing cash from a credit card. Keep reading to find out!
How Do Credit Cards Work?
A credit card is a line of credit that can be used for instant cashless payments or online purchases. When you’re using a credit card for these transactions, you’re not using the money you already have—you’re using money you’ve borrowed that can be repaid at a later date.
If you want to know ‘can I withdraw money from my credit card,’ the answer is—it depends on the lender. The important thing to remember about credit cards is that you have to pay back the money you’ve spent with interest: each month, you need to make at least the minimum payment set by your credit card provider, but keep in mind the interest rate is usually quite high, which is something to consider if you’re thinking about getting a credit card.
|DID YOU KNOW? Before there were credit cards in the UK, there were credit vouchers. Introduced in 1880 by the Provident Clothing Group, vouchers could be exchanged for goods in some shops and then paid off in affordable weekly installments to a Provident representative.
Can You Withdraw Cash from a Credit Card?
The majority of credit card providers allow you to make a cash withdrawal up to a certain amount. This is called a cash advance, and it’s a viable way to get some quick cash in case of an emergency.
You can make a cash withdrawal from your credit card by using an ATM or submitting an ID at a provider’s branch, or get cashback when using your card to pay in a shop. However, this comes at a cost, as credit card withdrawals incur charges and fees that we’ll discuss in more detail in the following section.
The Cost of Credit Card Cash Withdrawal
Using the ATM to withdraw money from your credit card can be very expensive: as soon as you make the withdrawal, daily interest will start to accumulate, and it will be calculated into your monthly credit card bill. This isn’t the case if you use your credit card solely for purchases, as no interest will be charged this way if you pay your bill in full every month.
In addition to the interest, most lenders also charge a cash advance fee on every transaction, which is either fixed (for example, £3) or a percentage fee (for example, 3% of the withdrawal amount). This fee is charged on every withdrawal, so the more withdrawals you make, the higher your credit card bill.
How To Withdraw Cash from a Credit Card Without Fees in the UK?
Even if you have an interest-free offer on your card, this doesn’t pertain to cash withdrawals, and you’ll still be charged both the fee and the daily interest.
However, even though you can’t completely avoid the fees, you can look for cards that don’t charge a withdrawal fee, although you’ll still be liable for paying interest. You should also consider getting a money transfer card—you can transfer funds from your credit card to your current account and withdraw the money using your debit card. You won’t pay any withdrawal fees, although you’ll probably have to pay a small percentage fee on the amount you’ve transferred.
|DID YOU KNOW? The latest numbers from October 2021 show that 59.6 million credit cards were issued to UK residents, indicating a significant decline from February 2020, when 66 million credit cards were in circulation in the UK.
|Credit cards are lines of credit that allow users to repay the money they’ve spent at a later date, with interest.
|Credit card withdrawals can be conducted at an ATM, in the bank’s branch, or in a store as cashback.
|Cash withdrawals from credit cards incur two charges—daily interest and cash advance fee.
|Cash advances are subject to withdrawal limits—you can’t withdraw as much as you like.
|Certain transactions are regarded as cash advances even when no physical money is withdrawn, so customers should be careful with credit card payments.
How Much Cash Can You Withdraw from a Credit Card?
Now that you have the answer to ‘can I withdraw money from a credit card,’ you probably want to know how much can you withdraw.
The credit card withdrawal limits depend on various factors, and they can vary depending on the policies imposed by the bank or building society that issued the card. The determining factors are listed below:
- The credit limit – The withdrawal can’t exceed the card’s credit limit.
- The available credit – You can’t withdraw more than you have left on your credit card.
- The cash advance limit – Credit card providers also impose limits on cash advances, usually 90% of the available funds.
- The ATM limits – The ATM withdrawal limits are imposed either per transaction or daily, so you need to check your provider’s transaction/daily limits before withdrawing.
Knowing you can use a credit card to withdraw money can prove very useful in some circumstances, but you should keep in mind the withdrawal limits—you can’t always withdraw as much as you like!
|DID YOU KNOW? In August 2021, the total credit card debt in the UK amounted to £56.5 billion. Although this is a significant sum, the situation in 2020 was much drearier—the UK population owed £72.1 billion in credit card debt in 2020.
What Counts as a Cash Withdrawal?
Now that you’ve become familiar with all the important aspects of cash advances, withdrawing money from a credit card may seem pretty straightforward. However, things are a bit more complicated, as getting money from the cash machine isn’t the only thing considered a cash advance.
Some credit card transactions are regarded as cash advances by the credit card provider, and customers are responsible for paying all charges and fees incurred by cash advances. These transactions include:
- Mortgage payments
- Paying utility bills
- Buying travellers’ cheques or foreign currency
- Buying gift vouchers
- Betting and gambling
As all these transactions are considered cash advances, you need to be careful with your credit card payments as well as with your cash withdrawals.
Do Cash Advances Affect Credit Score?
You may be asking—can you take cash out of a credit card without it affecting your credit score? Well, cash advances don’t do any harm to your credit score, as long as you pay your credit card bill on time each month. However, the advances will show up on your credit record and remain there for as long as six years. If you were making a lot of cash withdrawals, this may be seen as a problem on future credit applications, as lenders may consider you an unreliable borrower who has trouble managing their finances. So, it’s best to keep the withdrawals to a minimum, and if you feel like you can’t control yourself, you can consider cancelling your credit card.
|DID YOU KNOW? Consumers making only the minimum payments on a credit card (the interest rate + 1% of the outstanding balance) will repay their credit card debt in 25 years and 5 months.
Withdrawing Cash from Credit Card: Things to Consider
Before we come to the conclusion, we’ll give you one last overview of all the things to consider before deciding to withdraw any funds from your credit card. Below, we listed everything you need to remember about credit card withdrawals:
- The daily interest charge
- The cash advance fee
- The withdrawal limits
- The type of transactions that are considered cash advances
- The presence of cash advances on the credit record
- Accumulation of interest
- Long repayment periods
Using a credit card, you can withdraw money, but as there are many negative aspects of credit card cash withdrawals, we recommend resorting to this only in the case of an emergency, and making sure to avoid it if you have an important credit application coming up.
If you’re not in urgent need of cash, you can consider some alternative ways of getting cash, such as money transfer cards, personal loans, or simply borrowing from friends or family.
|DID YOU KNOW? You already know ATMs are used for withdrawing money from debit and credit cards. However, many people don’t know ATMs can be used for depositing cash into your bank account, although there are limits on how much you can deposit at the bank.
Can you take cash out on a credit card? Absolutely! But, should you do so? Well, don’t make any withdrawals until you’re familiar with fees incurred by cash withdrawals, the stricter withdrawal limits, and the effect these withdrawals may have on your credit score.
In our opinion, credit card cash withdrawals should be considered a last resort, and you should go for them only in the case of an emergency!
There are two charges on cash advances—the daily interest that begins to accumulate on the day of the withdrawal, and the cash advance fee, which can be either a fixed or a percentage fee. The total cost depends on the provider and how high their fees and interest rate are.
Using a credit card at an ATM is just like using a debit card, the only difference between the two being that credit card withdrawals are subject to interest, while debit card withdrawals aren’t.
You know the answer to ‘can you withdraw cash from a credit card’ is affirmative, but if you want to know how much can you withdraw, you need to ask your bank. Different banks have different limits, ranging from 20% to 90% of the available balance.