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There are many factors to consider when choosing a credit card, including interest rates, annual fees, your personal spending habits, and the rewards it offers. You may also be wondering if you can get cash back with a credit card. The short answer? Absolutely – some credit cards offer cashback options (though not all).
Two of the main ways you can get cashback from a credit card: a cash advance or cashback rewards (although it’s important to note that cashback rewards aren’t always directly translated to “cash” or “dollars”). One of the best benefits credit cards offer, however, are cashback rewards, which involves different types of reward structures to consider — from flat rates and tiered rewards to an upfront welcome bonus.
Let’s explore a few helpful features, lucrative perks, and how to get cash back on your credit card so you can take advantage.
Can you withdraw cash from a credit card?
First, let’s start with the basics. Can you withdraw cash with a credit card like a debit card? Not directly, but you can withdraw a cash advance from a credit card.
From there, it’s important to understand the difference between cash advances and cashback rewards. While they sound similar, they are actually quite different. A cash advance is essentially a small loan you take out against your existing balance at a bank, while cash back rewards are dollars or points you earn by using your credit card to make a purchase.
How to get a cash advance on a credit card
Can you withdraw cash from a credit card? Yes. Many banks offer cardholders the option to take a cash advance on their credit card. Essentially, you borrow a loan against your full balance from a lender.
advantages
Taking a cash advance on your credit card is a quick and easy way to access cash, especially when you need it urgently.
There are a few key ways to withdraw a cash advance from your credit card:
- Convenience Check issued by your bank
- Personally in a branch
- Using your credit card instead of a debit card at an ATM
How much cash advance you can withdraw from your credit card depends on your bank and how much you’ve already borrowed against your balance. Options vary by bank and credit card type, as not all banks have branches. Basically, cash advances are limited to a certain percentage of your credit limit. From there, the amount you wish to borrow will appear on your next credit card statement. It’s a convenient, hassle-free transaction.
Disadvantages
While withdrawing a cash advance from a credit card is easy and efficient, the convenience can come at a price. Here are some of the disadvantages of taking a cash advance from a credit card:
- Additional Fees: A cash advance can incur additional fees — typically three to five percent — so it’s important to check the fine print in your bank’s terms and conditions.
- Immediate accrual of interest: Just like purchases made with your credit card, a cash advance also bears interest. The difference is that interest on cash advances accrues immediately from the day you receive the cash advance.
- Impact on creditworthiness: A cash advance can also affect your credit score if you don’t pay it back right away. This is mainly because a cash advance is still considered a fraction of your total credit utilization rate, which can add up to 30 percent of your credit score. If that amount is on your credit card statement for a month or more, it could have a negative impact on your credit score.
Cash back with a credit card at a cash register
There’s one place your cashback options are more limited, and that’s at the retail and grocery store checkout counters. So can you get cash back with a credit card at a register? Mostly no. Most credit cards don’t offer a way to get cash back at a cash register, although there are some exceptions. Otherwise you will need a debit card.
If you use a debit card to make a purchase in a retail store, you will be asked to choose whether you want cash back and how much. Essentially, you withdraw with your debit card like you would at an ATM while completing your purchase.
Credit Card Rewards: How to earn cashback
So what exactly is cashback on a credit card and where do you get cashback with a credit card? There are three main credit card reward structures: points, miles, and cashback (among other lesser-known perks).
- Points: Points earned based on a specific rate per dollar spent, most commonly redeemable for gift cards, a statement credit, travel, or cash.
- Mileage: Same rationale as points-based cards, with points redeemable for booking travel.
- Cash Back: Dollars earned instead of points, fixed at a specific rate per dollar spent.
With points or miles credit cards, the value of a point earned may depend on how you redeem your points, which can create confusion for cardholders. For example, when you redeem points for travel, your points may be more valuable than when you redeem your points for a statement credit, gift card or other redemption option.
Luckily, cards with cash back options have a much simpler and more straightforward rewards plan than points or miles credit cards.
Cash Back Rewards: Which Structure Is Best For You?
One of the best benefits credit cards offer is cashback rewards, and there are a few different types of rewards to choose from:
- flat rate
- Tiered Tariff
- rotating
Which cashback bonus card is best for you ultimately depends on your personal lifestyle and spending habits.
Flat rate for all purchases
Flat rate cashback credit cards are the easiest of all options. With a flat rate, you get a fixed percentage of cashback on every purchase, regardless of the type of purchase (gas, groceries, retail, etc.).
For example, if you spend $100 and your cashback reward rate is three percent, you will get $3 back on the transaction. From there, cash back rewards include redemption options like a statement credit, check, or bank deposit, although your lender may make other options available.
Tiered price for purchases
Tiered cashback reward cards are a bit more complex than flat rate cards, but still relatively simple. The most common tiered cashback rewards include main categories such as food, groceries, gas, and entertainment. Some cards offer a higher percentage cashback reward for certain categories and a lower rate for others.
Rotating Rewards
With categories rotating, credit card companies regularly change which categories receive a higher cashback rate. The benefit of rotating categories is that they tend to offer some of the highest cash reward rates: up to six percent for most cards. However, it can be difficult to get the most out of your card because the categories change so frequently.
your best bet
Ultimately, the best way to get cash quickly — and with no associated interest or penalties — is to use a debit card to get cash at certain retailers or simply from an ATM. In most cases, it is not possible to get cash back at a register with a credit card at a retail store, and getting a cash advance on your credit card can be costly.
However, if you want to make money back on your monthly purchases, choosing a credit card with a rewards structure that suits your spending habits might be your best bet.
Would you like to pay off your existing credit card debt? Use our credit card payout calculator to estimate your payout schedule.
procurement
- Credit cards offering cash at a checkout. Discover (2022).
- Confusion caused by different point values when redeeming. CNBC (June 2022).
- This is how flat rate credit cards work. US News & World Report (October 2022).
- How rotating rewards work. Time (June 2022).
- Rotating bonuses offer up to 6 percent back. US News & World Report (October 2022).
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