Created by: Rebecca Goodman | 29 April 2019

What will happen to my credit score if I withdraw cash on a credit card?

Although it is possible to withdraw cash on your credit card, it is expensive and will leave a mark on your credit history. Here we explain how it works, how much it will cost you, and what impact it can make on your credit history.

Can I withdraw money on a credit card?

If you have a credit card, it is possible to withdraw cash on it from an ATM although you’ll get charged a high interest rate for doing so.

This is called a cash advance and there will be a limit on how much money you can take out on your card. Paying for other things, including energy bills, buying travel money, or making mortgage or rent payments may also be classed as making a cash advance.

How much will I be charged?

Whenever you take out cash on a credit card you will be charged by your lender. You will be charged a daily interest rate on the money you have taken out, and you’ll also be charged a cash advance fee, which can either be a percentage of the amount you’re withdrawing or a one-off fee.

What impact will it have on my credit score?

Every time you use your credit card to take out cash a mark will appear on your credit score. This can be seen by other lenders and it might make them less willing to lend to you, or it could increase the interest rate of any future lending.

This is because taking money out on a credit card indicates to a lender that you’re having problems managing your money and you’re taking out the cash to pay for bills you would usually cover with cash from your current account.

What other options do I have?

In the first instance, if you have money in your current account, or you have savings, it’s much better to use this first rather than taking out money on your credit card.

Depending on your credit score and personal situation, using a credit card - if there’s a 0 per cent interest rate - for new purchases is another option. These cards don’t charge any interest during the 0 per cent period, but they’re only worth using if you know you’ll be able to pay the debt off during this period.

However, if you’re struggling to make regular payments and you’re considering using your credit card to cover these, there is free independent help available from a number of debt charities.

These charities and organisations are independent and confidential and they can help you to work out a repayment plan to clear your existing debts. They can also talk to lenders for you and arrange holidays from interest to give you time to pay off existing debts. If you’re being hassled by debt collectors they can also help and arrange for you not to be contacted for 30 days in order to give you some respite from them.

Some of the most well-known organisations to approach include StepChange, Citizens Advice, National Debtline and Christians Against Poverty.

If you’re seeking help from one of these firms, you should never have to pay for the service. There are some companies offering debt advice who may try to charge you for the service but they are to be avoided at all costs.

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