Can I Get Cash Back With A Credit Card?

By Michelle Lambright Black
Reviewed by: Ana Gonzalez-Ribeiro, AFC®
Published on: 10/11/2022

Credit cards can offer you many perks when you use them in a responsible way. But if you need the ability to access cash in a hurry, credit cards probably aren’t your best resource in this situation due to their high interest charges.

That being said, there are a few potential ways that you may be able to get cash from a credit card account. For many, the best way to accomplish this goal is to open a cash back credit card.

You may also be able to tap into a portion of your credit line at an ATM and receive a cash advance from your credit card issuer. This option, however, comes with some considerable downsides as well.

The guide below will walk you through how cash back credit cards work, along with several mistakes you should avoid when it comes to these types of rewards accounts. You’ll also find details about credit card cash advances and why it’s typically best to avoid using them.

How Cash Back Credit Cards Work

When you work hard to earn a good credit score, you may find that it’s easier to qualify for more attractive credit card offers. (Note: Good credit alone doesn’t guarantee that you will qualify for financing like credit cards and loans.) One potential type of account you may want to consider once you establish good credit is a cash back credit card.

A cash back credit card can give you the opportunity to earn cash rewards based on your everyday purchases. For each eligible purchase you make using your credit card, you may earn a certain percentage in the form of cash back.

Choosing a Cash Back Credit Card

If you’re in the market for a cash back credit card, you’ll find that there are many different options to consider. Some cash back credit cards feature flat-rate cash rewards. For example, you might open an account that offers 2% cash back across the board on qualifying purchases. In this scenario, if you spent $1,000 on qualifying purchases you could earn $20 back in cash rewards.

Other cash back credit cards might have different rewards-earning structures. You might, for example, prefer to open a credit card with category bonuses. This type of rewards card may offer a higher cash back earnings rate (e.g., 3%, 4%, 5%, etc.) on select purchases such as gas, groceries, dining, and more. However, it’s common for purchases that you make outside of the card’s bonus categories to earn less rewards (perhaps 1% or 1.5%).

With so many different options, it’s a good idea to shop around and see what’s available before you start filling out credit card applications. You’ll want to figure out which accounts you’re likely to qualify for (based on your credit score, credit history, and other details) and search for the credit card with the rewards and benefits that appeal the most to you.

Mistakes to Avoid with Cash Back Credit Cards

The potential to earn rewards, especially flexible cash rewards, on your everyday purchases, can be enticing. Yet it’s critical to manage your credit cards responsibly. Certain credit card mistakes could offset the value of any rewards you earn from those accounts.

Below are three of the biggest mistakes to avoid with cash back credit cards.

  • Late Payments. The first rule of thumb to follow with any type of credit card—cash back or otherwise—is to always pay on time. Late payments can stay on your credit report for up to seven years and may damage your credit score. Your card issuer may also charge you expensive late fees if you pay after the due date. You also risk triggering the penalty APR on your account if you fall far enough behind on your bill.
  • Overspending. With credit cards, it’s also important to avoid charging more than you can afford to pay off each month. If you fail to pay off your full statement balance, you’ll usually wind up paying expensive interest charges. And when you revolve a balance from one month to the next, you may start to pile up credit card debt that’s difficult to pay down in the future.
  • Chasing Rewards. Whether your credit card earns cash rewards, points, or miles, it is a mistake to spend extra money in an attempt to chase rewards. In general, you shouldn’t use your credit cards for purchases that you don’t have the ability to repay right away. Otherwise, the high cost of interest could negate any rewards you earn.

Redeeming Cash Back Rewards

The process of redeeming cash back rewards may vary depending on several factors, including the type of credit card you open. Below are a few examples of ways your card issuer might allow you to redeem the cash rewards you earn on your account.

  • Transfer cash rewards to a bank account. If your credit card issuer offers this redemption option, you should be able to request an electronic transfer to your bank account. However, you might need to have a bank account with your card issuer (in addition to your credit card account) to take advantage of this option.
  • Get a check in the mail. Some card issuers may allow you to request a check equal to the balance of the cash back rewards you’ve earned.
  • Request a statement credit. In this scenario, you may be able to apply the cash rewards you’ve earned toward your outstanding credit card balance.
  • Convert to points. Some card issuers will let you convert the cash rewards you earn to points. From there, you may be able to apply the points towards travel, gift cards, and other rewards available through the credit card company’s rewards program.

Note that you may have to earn a certain amount in rewards before a card issuer will allow you to redeem any cash back. You should also pay attention to whether cash rewards feature expiration dates that could impact you. Finally, be sure to keep your account in good standing or you could risk losing the credit card rewards (cash back or otherwise) that you earned.

How a Credit Card Cash Advance Works

You can’t get cash back at a store with a credit card the way you might be able to if you pay for a purchase with a debit card. Yet it might be possible to get cash with a credit card at an ATM. This process is known as a credit card cash advance.

A cash advance is a way to borrow money against your credit card’s line of credit. The funds you withdraw don’t come out of your bank account, as they do with a debit card. Instead, your card issuer will add the money you borrow to your outstanding credit card balance.

Before you use a credit card for a cash advance, there are a few details you should understand.

  • Cash Advance Fee. Your card issuer will likely charge you a cash advance fee to withdraw funds from your credit line. This fee might be as high as 5% of the amount of cash you borrow.
  • Cash Advance APR. Credit card interest rates are notorious for being high compared with some other types of financing (like personal loans for good credit). But the APR credit card companies charge for cash advances is often even higher than the regular APR on a credit card account.
  • Cash Advance Limit. Your credit card issuer may not let you access your full credit line in the form of a cash advance. Instead, you may have a smaller credit limit that you can withdraw in cash.
  • Immediate Interest. When you make a habit of paying off your full statement balance each month by the due date, you can avoid paying interest on a credit card. But when you get a cash advance, interest often kicks in immediately without any grace period.

Planning Ahead

A credit card can be a useful financial tool if you handle it the right way. Well-managed credit cards have the potential to help you build credit history and provide convenient payment options with robust fraud protections. If you can build (or rebuild) your credit and qualify for a rewards credit card, you may be able to earn cash back or other rewards that could be even more beneficial.

However, it could be dangerous to rely on your credit card as a form of emergency financing, especially if you use the account for cash advances. Instead, you may want to work toward protecting yourself in other ways, such as creating a budget and building a reliable emergency fund.

Good credit can also be an asset when unexpected expenses arise—especially if you’re still working hard to save money and build a sizable emergency fund. With good credit, you may be able to qualify for more affordable financing options that could feature lower interest rates. When you do have to borrow money, lower interest rates could make it easier to repay the debt once your financial situation improves.

About the author

Michelle L. Black is a leading credit expert with over 17 years of experience in the credit industry. She’s an expert on credit reporting, credit scoring, identity theft, budgeting and debt eradication. See her on LinkedIn and Twitter.

About the reviewer

Ana Gonzalez-Ribeiro, MBA, AFC® is an Accredited Financial Counselor® and a Bilingual Personal Finance Writer and Educator dedicated to helping populations that need financial literacy and counseling. Her informative articles have been published in various news outlets and websites including Huffington Post, Fidelity, Fox Business News, MSN and Yahoo Finance. She also founded the personal financial and motivational site and translated into Spanish the book, Financial Advice for Blue Collar America by Kathryn B. Hauer, CFP. Ana teaches Spanish or English personal finance courses on behalf of the W!SE (Working In Support of Education) program has taught workshops for nonprofits in NYC.

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Our goal at Self is to provide readers with current and unbiased information on credit, financial health, and related topics. This content is based on research and other related articles from trusted sources. All content at Self is written by experienced contributors in the finance industry and reviewed by an accredited person(s).

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Written on October 11, 2022
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