Many Canadians have wondered if they can withdraw money from a credit card, and while it's certainly a convenient option, cash advances are rarely a good idea. These transactions come with hefty fees and interest charges.
This article explores why cash advances should be a last resort and introduces more affordable alternatives. We'll also go over the best options for getting the cash you need without breaking the bank.
Key Takeaways
- You can withdraw cash from an ATM using a credit card, but it's recommended only as a last resort.
- Credit card cash advances are expensive, with flat fees plus interest rates ~23% that start accruing right away.
- If you need emergency cash, consider using a line of credit or a low-interest credit card.
Never miss an amazing deal again + get our bonus 250+ page eBook for FREE. Join 50,000 other Canadians who receive our weekly newsletter – learn more.
What is a cash advance?
If you've been wondering, "Can I withdraw money from a credit card?" the answer is yes, you can, and it's called a cash advance. This is a type of transaction that allows you to withdraw cash from your available credit limit at an ATM.
Unlike typical credit card purchases, which begin to accumulate interest after a grace period, the interest on your cash advance begins to add up as soon as you withdraw the funds.
Cash advances also come with fees. Banks typically charge either a flat fee ranging from $3 – $5 or 1% of your total cash advance.
How to withdraw money from a credit card
Getting a cash withdrawal is as easy as using your debit card at the ATM. Here's what you do to withdraw money from a credit card at an ATM:
- Insert your card into the machine and enter your PIN
- Select the account to withdraw from and get your cash
- The amount you withdraw will be removed from your credit limit
Remember: To do a cash withdrawal from a credit card, your card must be on the same network as the ATM. Visa and Mastercard are widely accepted at most ATMs, but Amex can be trickier. You can use their ATM locator to find one near you.
Cash advance vs. balance transfer
You might be considering using a cash advance on one credit card to pay off the balance for another. This is similar to performing a balance transfer, which allows you to transfer debt from one card to another.
If you use a cash advance to pay off another credit card, remember that you'll start accruing interest right away. Look for a low-interest credit card with a cash advance interest rate that's lower than your card's purchase interest rate.
It's also worth looking for a credit card with a strong balance transfer offer. Instead of getting a cash advance to pay off your debt, you can transfer your debt to a card that offers a temporary low interest rate – often as low as 0% – for a set period of time.
You also may be able to use a balance transfer to deposit funds in your account. With MBNA, for example, you can request a funds transfer to the chequing account of your choice. Once it's in your chequing account, you can withdraw it from an ATM using your debit card. It's a less efficient option, but still one to consider if you get a good offer.
Keep in mind: This is still a balance transfer, not a cash advance. While the interest rates are usually the same, you may occasionally get balance transfer offers (as shown in the screenshot).
What to consider before getting a cash advance
The most important details to consider before getting a cash advance involve fees and interest:
- No interest grace period: You'll be charged credit card interest immediately on any cash advances, and the interest rate is almost always higher than that of purchases, at around 23%. If you do request a cash advance, you'll see an interest charge on your next credit card statement, even if you paid the previous statement balance in full.
- Cash advance fee: Cash advance fees vary by credit card company but are typically $3 – $5. Some providers charge a percentage of the cash withdrawn, between 1% and 3%. And that's on top of any ATM fees you're subject to.
Like regular purchases, cash advances count toward your credit card limit. The more cash you withdraw, the less available credit you'll have, and the more you'll increase your credit utilization ratio, which can affect your credit report and score.
Alternatives to getting a cash advance
Low-interest credit cards, lines of credit, and buy-now-pay-later or layaway programs are all valuable cash advance alternatives to consider.
- Low-interest credit card: If you use credit cards to get cash, consider applying for a low-interest credit card. Paying less interest means you can pay off your balance faster.
- Personal line of credit: A personal line of credit is a type of personal loan – you can access it whenever you need cash. You'll typically be able to withdraw cash from the line of credit using your debit card at an ATM. The interest rate will vary based on your bank and credit score.
- Buy now pay later programs: If you need to make a large purchase, find out if you can use a buy now pay later (BNPL) plan. This breaks the large purchase into smaller installments. You're charged multiple times but for smaller amounts, which can make it easier to pay for the purchase.
Here's when a cash advance makes sense
A cash advance should usually be a last resort. But there's one instance when you can get cash from your credit card without the exorbitant interest: when you have a negative balance on your credit card.
Think of it as prepaying your credit card. If your credit card balance is negative, the cash advance you make simply comes out of your negative balance. You won't be charged any interest (though the fees still apply), and you won't be running up your available credit.
Travelling abroad? Your debit card might not work at an ATM, but your Visa or Mastercard will. If you use your credit card or get cash advances while travelling, consider getting a card with no foreign exchange fees, like the Scotiabank Gold American Express Card.
×3 Award winner 
$75 GeniusCash + Up to 45,000 bonus points + No foreign exchange fees.*
GC: $75
3x Award winner FAQ
Can I withdraw money from my credit card?
Yes, you can usually withdraw credit card funds from an ATM by making a cash advance, but you need available credit. You can't withdraw money from your credit card if it's maxed out or your account isn't in good standing. While they are convenient, cash advances like this are recommended only as a last resort.
Is it okay to withdraw cash from a credit card?
Yes, it's okay to withdraw cash from your credit card if it's a legitimate financial emergency and you don't have an emergency savings fund to draw from. However, cash advances can be expensive, so be sure to consider all your options first. Using a BNPL program or personal line of credit is often a better choice.
Is it possible to withdraw money from a credit card without charges?
No, you can't really withdraw money from your credit card without being charged fees. It's risky for lenders to give you direct access to money, and cash advances are essentially quick personal loans, so lenders charge higher interest rates and fees for your convenience and their risk.
Can I withdraw $2,000 from my credit card?
Whether or not you can withdraw $2,000 depends on your credit limit and your card's specific terms and conditions. There might be a maximum amount of money you can withdraw per day, so be sure to read your card's details carefully.
creditcardGenius is the only tool that compares 126+ features of 245 Canadian credit cards using math-based ratings and rankings that respond to your needs, instantly. Take our quiz and see which of Canada's 245 cards is for you.
GC: 
Comments
Leave a comment
Required fields are marked with *. Your email address will not be published.