When you need extra money in a pinch, a traditional loan might not cut it. Whatever your immediate cash needs may be, you’ll likely need something that can offer you access to money right away, without the need to wait days to complete a loan application and wait for approval and funding.
In this case, you might be able to tap into your credit card account. Through a credit card cash advance, you can withdraw funds up to your credit card limit without the need to go through the typical loan process.
Cash advances can be a quick-fix option when you need financial help, but it’s important to understand its potential drawbacks, too. Read on to find out more about credit card cash advances and how you can use them to transfer money from your credit card to your bank account.
Key Points
- A credit card cash advance is a short-term loan that lets you withdraw cash from your card’s credit limit.
- These advances are very convenient, but often come with high fees and immediate interest.
- You can use a cash advance to transfer money from your credit card to your bank account, either through a withdrawal from an ATM or bank teller, or a convenience cheque.
- Once you have the funds, you can deposit them into your bank account.
What Is A Credit Card Cash Advance?
A credit card cash advance lets you borrow money against your card’s credit limit. It’s fast and convenient, allowing you to skip the traditional loan application process. Instead, the money is available almost immediately.
You can get a cash advance from a bank teller, ATM, or with a convenience cheque, up to a certain percentage of your credit limit.
However, credit card cash advances come with high fees and interest rates that start accruing immediately. In fact, cash advance rates are often higher than purchase rates. Because of the high cost, cash advances are best used only in emergencies or when no other options are available.
How Do I Transfer Money From My Credit Card To My Bank Account?
Fortunately, your options are not limited when it comes to transferring money from your credit card to your bank account. You can complete the transaction through a teller or ATM, use a convenience cheque, or through online banking.
Use A Teller Or ATM
You can use your credit card to withdraw cash in much the same way you’d use your debit card. Simply bring your card to an ATM or bank teller, and access the funds from your credit card account.
Then, you can deposit the funds into your bank account once cash has been withdrawn. Keep in mind that not all ATMs allow cash deposits, but tellers do.
Credit Card Convenience Cheque
Credit card providers often issue complimentary convenience cheques. When you use one of these cheques, it is as if you tapped, swiped, or inserted your credit card. You can use the cheque to deposit funds into your bank account or withdraw cash.
Depending on the credit card provider, a cashed credit card convenience cheque could be treated as a cash advance. Be sure to read the fine print to fully understand how the convenience cheque will be treated.
Make A Transfer Online
You may be able to do an online transfer if your credit card and the bank account you’d like to deposit the funds to are with the same bank. It’s as simple as logging into your online bank account and transferring the funds from your credit card to your bank account.
Are There Fees?
Yes, one of the biggest problems with cash advances on credit cards is that there are hefty fees associated with the process of transferring money from your credit card to your bank account:
Cash Advance Fees
Cash advance fees tend to be around $3.50 to $5 in Canada. If you use your credit card for a cash advance abroad, it will cost more, up to $7.50 per transaction. Check your credit card contract’s terms before withdrawing to find out how much you’ll pay.
Interest Charges
Cash advance interest rates are typically higher than purchase rates, though the exact cost varies from card to card. It’s important to understand that interest will accrue on the cash advance amount immediately. This is in contrast to regular credit card transactions, where interest doesn’t accrue until after the grace period.
Will Transferring Money From My Credit Card To My Bank Account Hurt My Credit?
There is no direct impact on your credit score when you transfer money from your credit card to your bank account. However, there can be an indirect impact if you’re not careful.
A cash advance transaction can affect your credit score if you exceed your credit limit or your credit utilization ratio becomes too high. That’s why it’s important to keep an eye on your credit card balance and avoid maxing out all of your credit cards to protect your credit.
Should You Transfer Money From Your Credit Card To Your Bank Account?
Given the potentially high cost of a credit card cash advance, you should only consider this option in urgent financial situations. Some examples of this scenario include:
- Payment of a utility bill to avoid overdue charges and loss of service
- Home repair
- Emergency medical expense
- Pet emergency
- Car repair
Keep in mind that cash advances are typically limited to a portion of your credit card limit. In addition, you need to have enough space on your credit card to support the full cash advance you want to complete. If you require more cash to pay the expense at hand, you might need to explore other options.
Alternatives To Get The Cash You Need
Transferring money from your credit card to your bank account may give you quick access to cash in an urgent situation, but it’s not ideal due to the hefty transaction fees. Consider other alternatives before making your decisions.
Build An Emergency Fund
Having an emergency fund can reduce your dependency on financing when an unexpected expense pops up or you’re tight on cash. As little as $500 in savings can go a long way. Of course, this may not solve any pressing financial needs, but it’s a strategy you may want to adopt going forward so you can avoid situations that may call for drastic measures.
Personal Loans
A personal loan can be an excellent financing alternative. The APR on a personal loan is typically lower than the interest rate on cash advances, you can get the funds into your bank account within one business day and have the opportunity to obtain more cash.
Cash Advance Apps
Apps like Bree and Nyble offer quick, low-cost cash advances to over small expenses between paydays:
- Bree: Offers up to $350 in cash advances with 0% interest and no credit check.
- Nyble: Provides up to $150 in interest-free advances with a monthly subscription fee.
0% APR Credit Cards
Some credit cards offer promotional periods with no interest on purchases or balance transfers. If you have the financial means to pay off your balance before the promotional period ends, you can use this type of card to make a big purchase on credit without having to pay exorbitant fees that are typical with other high-cost credit products, like payday loans.
Buy Now, Pay Later (BNPL) Services
BNPL services like Sezzle or PayBright let you split big purchases into installments, often without interest if you repay on time. You can complete a quick application with the merchant’s BNPL partner at the time of purchase, make an initial payment, then pay the remaining balance over installments.
Borrow From A Friend Or Family Member
If the expense isn’t an exorbitant amount of money, asking a friend or family to help you out until you can repay them may be an option.
Chequing Account Overdraft
Banks offer overdraft on chequing accounts, which allows you to withdraw more than what’s available in your account. This allows purchases go through even if your account balance is low and offers a convenient way to access to emergency funds.
However, banks charge overdraft fees when your account balance isn’t enough to cover a transaction. Plus, there’s a risk that your bank may reduce your overdraft limit or even close your account if you regularly overdraw.
Final Thoughts
Cash advances have their uses, especially if you’re in a pinch for cash and don’t have any other options available to you. Although, the convenience of a cash advance comes with a fee that should be avoided if possible. To make the best decision, consider your bank’s fees and the cost of other alternatives.
