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Running out of money can be rough. When your bank account is nearly empty, you might find yourself scrambling to get cash fast. It is possible to use a credit card to transfer money into a bank account by using a cash advance or balance transfer check, but we can’t recommend it.
Cash advances are risky because of the high interest rates and costly one-time fees. Balance transfers can lead to more debt if they’re not handled correctly. 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 provide cardholders access to cash from their revolving credit account. Typically, cash advances are performed using a credit card as one might a debit card at an ATM. Cash advances usually use an assigned PIN, as with a debit card. The amount withdrawn cannot exceed the current available balance on the credit card. Cash advance limits are often much lower than the entire credit limit of a card, so be aware of what your cash advance limit is if you choose to go this route.
Balance transfers are sometimes used to transfer one high-interest credit card balance to a new credit card offering little-to-no interest. Promotional 0% APR introductory periods are common with new credit cards, allowing cardholders a brief respite from interest building on a balance. But cardholders can also request a balance transfer check from a card issuer and cash it to get money fast. Some banks, like Chase and Citi, allow cardholders to transfer a balance online to a qualifying checking account.
Cash advances and balance transfer checks can be expensive. Card issuers typically charge fees for every cash advance or balance transfer. The fee may be a small percentage of the transaction or a dollar amount, typically ranging from 3% to 5% of the amount being transferred.
The interest you’ll pay on that cash advance will vary depending on the issuer. Cash advance APRs are often higher than the standard purchase or balance transfer APRs. Unlike purchases which have a grace period, interest usually begins to accrue the same day the cash advance is made.
Cash advances and balance transfers typically don’t qualify for credit card rewards like cash back or travel points. They can be useful in a financial emergency, but consider other options first because of the potential to fall into fast, rapidly-accruing debt.
How to Transfer Money from a Credit Card into a Bank Account
Use a Cash Advance
Some card issuers allow cardholders to transfer money from a cash advance directly into a checking account. If allowed, cardholders can usually initiate or request this transaction via the card’s online account.
Cardholders can deposit money from a cash advance into a bank account several ways:
- Use an ATM. Cardholders can withdraw money from an ATM using a credit card. Contact the number on the back of the card if you’re not sure what the PIN might be. Cardholders can then deposit the cash into an account at a local bank branch or by using a deposit-accepting ATM.
- Visit a bank branch. If you have a credit card issued by a bank, visit a local bank branch to withdraw funds. Ask the teller to deposit the cash into your checking or savings account.
- Order a check. Some card issuers will mail a check for the desired withdrawal amount. Checkholders can either deposit the check into a bank account or use it as a personal check to pay for 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 whether the company offers balance transfer checks. There may be transfer limits or qualifying conditions every cardholder has to 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 into a checking account directly. This would help eliminate extra steps like waiting for the check to be delivered and physically cashing it at a local branch or mailing back out to your bank.
Is It a Good Idea to Use a Cash Advance or Balance Transfer?
Cash advances should only be used in case of emergency, after all other reasonable options have been exhausted. Cardholders should first consider asking for an advance on income, dipping into savings accounts, taking out small personal loans with reasonable rates or even asking friends or family to borrow money.
Cash advances may seem like a quick and easy method to get cash fast, but the transactions usually have negative consequences in the long run. Cash advance interest rates are sometimes higher than credit card purchase APRs. Interest begins to accrue the day the cash advance is made. This can lead to quickly-accrued, massive credit card debt if the cardholder is not able to pay off the cash advance as quickly as possible. Cash advance fees tack on major extra costs as well.
Balance transfers also cost quite a bit, especially if the transfer amount is large. Whatever amount is transferred still needs to be paid off by the cardholder as quickly as possible. Interest may accrue on the date the balance transfer is made, which holds the same risk as a cash advance. Even if the initial fee is lower, don’t be fooled by other fine print applying to balance transfers.
As interest accrues and debt grows, there is danger of increasing overall credit utilization to a rate that may decrease a credit score. 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 carries an 0% APR promo rate, is a much better option. Cardholders in financial trouble should weigh other options first, 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 them an expensive option that could lead the cardholder into massive debt.