Your credit card may make payments convenient online, over the phone, or at your favourite retailer, but what about using that credit line when you need cash? Maybe you’re travelling, and you want to purchase some local trinkets for friends and family back home from a small cash-only shop. Perhaps a store’s credit card machine goes down, forcing them to only accept cash for a short period. Maybe you want to use that balance to give cash gifts around the holidays, or you want to give the kids cash to spend while on a family trip. No fear–you can use your credit card at an ATM to receive cash, just as you would use a debit card. But is it a good idea?

The Benefits of Credit Card Cash Advances

The obvious perk of the cash advance is your ability to use your credit card to access cash funds when needed. It’s easy. It’s convenient. You just visit an ATM, input the card and PIN, and receive cash against your credit limit.

Normally, you would use a debit card to access cash from your bank account, rather than taking out cash with interest. However, situations arise where that may not be possible, such as if your debit card were lost or stolen and you were waiting on a replacement. Credit card cash advances do have their place.

The Downside of Credit Card Cash Advances

That said, it probably isn’t a smart idea to regularly rely on cash advances from your credit cards. It will cost you, and maybe more than you think. There are several negative aspects to consider, including:

1. Cash advances often are not only subjected to interest, but they generally won’t include any interest free days. For example, the American Express Platinum credit card usually offers users 55 interest free days. Cash advances aren’t eligible.

2. You won’t just start accruing interest immediately with a cash advance, but you may be charged a higher interest rate. The Citibank Clear credit card, for instance, charges a regular 12.49% interest rate on purchases, but a 20.74% interest rate on cash advances.

3. It gets worse. On top of higher, and immediate, interest rates you’ll also likely face transaction fees for every cash advance. Those fees may be a few dollars, or a percentage of the cash advance amount depending on the card and withdrawal amount.

Understand that taking a cash loan against a credit card will cost you more, in one way or another, than using your bank account balance or your credit card directly for purchases. In the case of an emergency, it may be worth it, but it probably isn’t when it comes to your regular spending needs. Consider other options, knowing that a credit card cash advance is available as a (costly) last resort.