Can You Use a Credit Card at an ATM?

There could be many reasons you might want to use a credit card at an automated teller machine (ATM). Perhaps you've run into unexpected car repairs or another emergency that requires funds you don't have in your bank account. Maybe your child has an expense that you are unable to cover. Whatever the reason for using a credit card to make a cash withdrawal, it's essential to understand what you're getting into. Here, we'll cover the ins and outs of dropping by your local bank or credit union for a cash advance and offer options that can save you money.

Can you use a credit card at an ATM?

The short answer is yes. You can use a credit card at nearly any ATM to withdraw cash. Whether the ATM is at a bank, credit union, or other financial institution, ATMs are set up to allow you to conduct all kinds of business, including using a credit card to take out a cash advance.

Before you pull out the plastic, though, keep reading. There are things about using a credit card to take a cash advance at an ATM that you'll need to understand. Once you know everything there is to know about cash advances, you'll be in a far better position to make an informed decision.

What is a cash advance?

When you borrow funds from a credit card, it is called a cash advance. There are several ways you can use a credit card to take a cash advance.

• At an ATM
• In-person at a bank, credit union, or other financial institution
• By writing a "convenience check" that may have come with your credit card

How to use a credit card at an ATM

If you've ever used a debit card to take funds from an ATM, you'll likely find it easy to use a credit card instead. The differences are slight, and as long as you follow the prompts on the screen, you should have no trouble.

Here are two steps you'll need to take before you arrive at the ATM:

1. Make sure you know the personal identification number (PIN) associated with the credit card. If you've forgotten it or have never set one up, give the credit card company a call (you can find the phone number on the back of the card). Customer service should be able to provide you with the PIN or help you set one up. You'll need this number before you can make the ATM transaction.
2. While you have the credit card issuer on the line, make sure to ask the following:

• What is my current balance? You need to ensure that you won't go over your credit limit or push your credit utilization ratio too high.
• What is my credit limit? You'll need a high enough limit to cover the amount you plan to withdraw, the cash advance fee charged by the credit card company, and the transaction fee charged by the ATM owner.
• What is my cash advance limit? This is different from your credit limit, as it represents the amount the card issuer will allow you to use as a cash advance.

Before the credit card company representative answers any of your questions, expect them to ask questions of their own. They want to ensure that you're the legitimate cardholder and not someone trying to conduct a fraudulent transaction.

Once you're at the ATM and have inserted your card, there are only six more steps to take, each of which requires you to follow the prompts on the screen. While the wording may vary by ATM, they should all work along these lines:

1. Enter the PIN
2. When prompted, select "cash advance"
3. Select "credit card"
4. Enter the amount
5. Read and accept the terms, including fees
6. Remove your cash

The high cost of a cash advance

Unless you have no other options, a cash advance rarely makes sense (don't worry -- we'll cover alternatives in a moment). Here's why:

• High interest rate: If you look at the APR charged on your credit card for everyday purchases, you will likely find that the APR for a cash advance is much higher than the rate you pay for traditional purchases. You can find this information in your card's Schumer box.
• ATM fee: Unless the ATM you use is at your personal bank, you will probably be required to pay an additional ATM usage fee.
• Cash advance fee: The cash advance fee charged by most credit card issuers typically runs between 3% and 5%. Let's say you take out a $500 cash advance. The fee tacked on by the issuer will be anywhere from $15 to $25.
• Over-the-limit fees: Because your cash advance limit is not the same as your spending limit, it's easy to go over the allowable amount. If you do (even if it's fees that push you over), you could get hit with over-the-limit fees equal to the amount you went over. Let's say your cash advance limit is $500, and fees pushed you to $530. If you've agreed to your credit card company's over-the-limit fees, you could be charged an extra $30 for going over. Otherwise, your credit card company may decline the transaction.
• Missing grace period: When you take a cash advance, there is no such thing as a grace period. You are charged interest from the day the money is removed from the ATM machine.

Alternatives to a credit card cash advance

If you need money fast, a cash advance from an ATM is not your only option. Here are a few others worth considering.

Personal loan

Personal loans are versatile financial products, and most lenders do not care how you spend the money. If you have a strong credit score, you'll find it easy to land a loan with just about any lender -- in person or online. Better yet, the interest rate for borrowers with high credit scores is almost always lower than the average rate on a credit card. Even if you don't have a strong credit score, you may find that rate considerably lower than the rate charged for a credit card cash advance. The only rub is that if your credit score is low, you'll likely be hit with costly loan fees.

A small loan from your bank

If you're only looking to borrow a small amount, it pays to ask your bank for a loan. No matter where your credit score lands, your bank knows you and can quickly see how well you pay bills and manage money. If possible, offer up collateral. Collateral is something of value that you put up in exchange for the loan. It could be anything of value, from a classic car to coins or jewelry. The good news is that it will increase your chances of snagging the loan. The not-so-good news is that the bank has a legal right to repossess the collateral and sell it if you fail to make payments as promised.

Tap family or friends

Let's say you only need $500 and know you can repay it in the next four to six weeks. As long as you've never stiffed them before on a loan, it's fair to ask someone who cares about you to front the money. Be sure to create and sign a promissory note and then stick with your promise to repay.

No matter what you do, avoid payday lenders at all costs. Their interest rates often exceed 400% (despite what they may tell you), and you'll likely find yourself in an endless struggle to pay them off without taking out a second loan to cover the first.

Still have questions?

Some other questions we've answered:

• What should I know about security at an ATM?
• What are the best banking apps?
• Should I use a credit card or a debit card?