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Running out of money can be difficult. When your bank account is nearly empty, you might find yourself scrambling for quick cash. It is possible to use a credit card to transfer money to a bank account using a cash advance or balance transfer check, but we cannot recommend this.
Cash advances are risky due to high interest rates and expensive one-time fees. Balance transfers can lead to increased debt if not handled properly. Before rushing to request a cash advance or balance transfer check from a card issuer, consider other methods such as using savings or taking out a small personal loan.
How do cash advances and balance transfer checks work?
Cash advances allow cardholders to access cash in their revolving credit account. Typically, cash advances are made using a credit card much like a debit card at an ATM. Cash advances typically use an assigned PIN, like with a debit card. The amount withdrawn cannot exceed the current available balance on the credit card. Cash advance limits are often well below a card’s total credit limit, so be aware of your cash advance limit if you choose to go this route.
Balance transfers are sometimes used to transfer the balance from a high interest credit card to a new credit card with low or no interest. Promotional introductory periods of 0% APR are common with new credit cards, allowing cardholders a brief respite from the interest that accrues on a balance. But cardholders can also request a balance transfer check from a card issuer and cash it to get cash fast. Some banks, like Chase and Citi, allow cardholders to transfer a balance online to an eligible checking account.
Cash advances and balance transfer checks can be expensive. Card issuers typically charge a fee for each cash advance or balance transfer. The fee can be a small percentage of the transaction or a dollar amount, usually between 3% and 5% of the transferred amount.
The interest you will pay on this cash advance will vary depending on the issuer. Cash advance APRs are often higher than standard purchase or balance transfer APRs. Unlike purchases with a grace period, interest generally begins to accrue the same day as the cash advance.
Cash advances and balance transfers are generally not eligible for credit card rewards such as cash back or travel points. They can be useful in a financial emergency, but consider other options first due to the risk of quickly running into quickly accumulating debt.
How to transfer money from a credit card to a bank account
Use a cash advance
Some card issuers allow cardholders to transfer money from a cash advance directly to a checking account. If permitted, cardholders can usually initiate or request this transaction through the card’s online account.
Cardholders can deposit cash advance money into a bank account in several ways:
- Use an ATM. Cardholders can withdraw cash from an ATM using a credit card. Contact the number on the back of the card if you are unsure of the PIN code. Cardholders can then deposit the money into an account at a local bank branch or using an ATM that accepts deposits.
- Go to a bank branch. If you have a bank-issued credit card, visit a local bank branch to withdraw funds. Ask the cashier to deposit the money into your checking or savings account.
- Order a check. Some card issuers will mail a check for the desired withdrawal amount. Check holders can either deposit the check in a bank account or use it as a personal check to pay something in person.
Use a balance transfer check
First contact your card issuer online or by calling the number on the back of the card to see if the company offers balance transfer checks. There may be transfer limits or eligibility requirements that each cardholder must meet before receiving approval for a balance transfer.
Balance transfer checks can be used to pay for things at a store or cashed at a local bank branch for deposit or withdrawal. If your card issuer is a bank, ask the representative if the balance transfer can be deposited directly into a checking account. This would help eliminate extra steps like waiting for the check to be delivered and physically cashing it at a local branch or sending it back to your bank.
Is it a good idea to use a cash advance or a balance transfer?
Cash advances should only be used in an emergency, after all other reasonable options have been exhausted. Cardholders should first consider asking for an income advance, dipping into savings accounts, taking out small personal loans at reasonable rates, or asking friends or family to borrow the money.
Cash advances may seem like a quick and easy way to get cash quickly, but transactions usually have negative long-term consequences. Cash advance interest rates are sometimes higher than credit card purchase APRs. Interest begins to accrue on the day the cash advance is made. This can lead to massive and rapidly accumulating credit card debt if the cardholder is unable to repay the cash advance as quickly as possible. Cash advance fees also apply to major additional costs.
Balance transfers are also quite expensive, especially if the transfer amount is large. Regardless of the amount transferred, it should always be repaid by the cardholder as soon as possible. Interest may accrue on the date the balance transfer is made, which carries the same risk as a cash advance. Even though the upfront fee is lower, don’t be fooled by other fine print that applies to balance transfers.
As interest accrues and debt increases, there is a risk that overall credit utilization will increase at a rate that could lower credit ratings. Experts recommend keeping your credit utilization rate below 30%.
Cash advances and balance transfer checks are two ways to transfer money from a credit card to a bank account, but should only be used as a last resort. Of the two, a balance transfer check, especially if it has a promotional 0% APR rate, is a much better option. Cardholders in financial difficulty should first weigh other options, such as taking out a small personal loan or asking friends or family to borrow money. Cash advance and balance transfer fees and interest rates make this an expensive option that could put the cardholder in massive debt.