While credit cards are great for a lot of things, using them as a way to put cash in your wallet isn’t one of them.
Debit cards have become so familiar, we're totally accustomed to punching in our PINs and asking for cash back at the grocery store. Credit cards don't offer quite the same amount of flexibility. For example, you can't request cash back on a credit card purchase at the grocery store or the pharmacy. However, you can get cash from your credit card at a bank teller or at an ATM. You'll just have to pay for the privilege.
According to most industry analysts who watch these kinds of statistics, cash advances have declined in popularity over the past few years. So many merchants accept credit cards, it's often easier to transact with plastic than with greenbacks, anyway. Even the best credit cards charge fees, so should you require cash in an emergency, here’s what you might end up paying:
- Cash advance fee. Many banks now charge an upfront fee of up to 5 percent when you convert part of your credit limit into cash.
- Immediate finance charges. Unlike purchases, most cash advances immediately start racking up interest. Many banks charge higher APRs for cash advances than for purchases.
- Network access fee. Your bank and the ATM network could each charge you a service fee of a few dollars for handling your cash advance.
- Teller processing fee. If you make your cash advance request from a live person at a bank or at a travel services agency, you can expect to pay an even higher service charge.
You can also get cash from your credit card by using convenience checks. Most of us use these to take advantage of balance transfer offers when we want to pay off a debt that's not linked to a major online bill payment service. Convenience checks often carry their own fees of up to 5 percent of face value.
One final -- but not necessarily recommended -- method to get cash from your credit card involves reloading prepaid debit cards at particular retail locations. However, merchants can dictate whether they process this kind of transaction as a cash advance. If you find one that doesn't, you can pay a flat fee for the reload card, then withdraw the cash from a participating ATM. Due to the potential for fraud, many merchants decline to sell prepaid card reload packs to customers using anything other than ATM cards or cash.
Used sparingly, this can be an inexpensive way to tap some cash from a credit card without paying hefty fees. Some cards may charge various fees for activation or usage. So be sure you fully understand the fees attached to the prepaid card.
While we're on the subject of cash back, if you're interested in earning rewards on your everyday spending, take a look at these popular cash-back credit card offers: