How to Liquidate Credit Cards Into Cash: 6 Smart Methods
Cash advances provide quick access to money but come with high fees and interest rates that start immediately. Several alternatives like convenience checks, reselling items, or paying bills with credit can help you access cash at lower costs. Before liquidating your credit card, consider cutting expenses, borrowing from family, or working with a credit counselor to avoid expensive debt.
Get Lower RatesBuying with credit cards is convenient, but sometimes you need actual cash. If you find yourself in a tight financial spot, your credit cards might help. They can provide emergency funds when you need them most.
Ideally, you should use credit cards for purchases instead of withdrawing cash. However, cash advances have become increasingly common in recent years. Understanding your options helps you make informed decisions about accessing emergency funds.
Struggling With Credit Card Payments After Cash Advances?
High fees and interest rates from cash advances can spiral into unmanageable debt. Credit counselors negotiate lower rates and create affordable payment plans that free up your cash flow.
Lower Your PaymentsWhat Are Cash Advances?
A cash advance is a loan from your credit card issuer. You borrow money against your available credit line. You can withdraw it from an ATM with your PIN or at a bank counter.
Credit card issuers set specific limits for cash advances. The cash advance limit is typically lower than your total credit limit.
How to Get a Cash Advance at an ATM
The process is straightforward if your card allows cash advances:
- Insert your credit card into the ATM
- Enter your credit card PIN
- Select the “cash advance” option
- Choose credit when prompted between checking, debit, or credit
- Select the amount you need
Cash advances can save you in emergencies. Your car breaks down and the mechanic only accepts cash. You lose your job suddenly and need money for bills. Getting cash quickly can provide crucial relief.
But you shouldn’t rush to the ATM just yet. Understanding the drawbacks helps you avoid expensive mistakes.
Major Drawbacks of Cash Advances
The convenience of instant cash comes with significant financial risks. Cash advances carry costs that can quickly spiral out of control.
Cash advances are expensive. You pay fees just for accessing the cash, typically 3-5% of the amount withdrawn. APRs on cash advances are higher than regular purchases, often 25% or more. Interest starts accruing immediately because there’s no grace period.
Cash advances have lower limits. Your cash advance limit is usually only a fraction of your total credit limit. You might have a $5,000 credit limit but only $1,000 available for cash advances.
Cash advances are risky for your credit. High fees and interest rates add up fast. Missing payments damages your credit score quickly. The debt becomes harder to pay off each month.
6 Other Ways to Liquidate Credit Cards Into Cash
Cash advances aren’t your only option for converting credit to cash. Several alternatives offer better terms and lower costs.
1. Use Convenience Checks
Some credit card issuers provide blank checks linked to your account. You can write these checks to anyone, including yourself. Issuers sometimes offer promotional periods with low or zero interest.
Write a check to yourself and deposit it into your bank account. You get cash without ATM fees during promotional periods. Read the terms and conditions carefully before using convenience checks.
2. Buy Items on Sale and Resell Them
You can purchase discounted items with your credit card and resell them for cash. Look for clearance sales, liquidation events, or wholesale deals. Popular items include electronics, gift cards, and brand-name products.
Resell through online marketplaces, local buy-sell groups, or pawn shops. With careful selection, you might even make a profit.
Be cautious: Banks classify some purchases as cash advances. Money orders and wire transfers often trigger cash advance fees. Stick to regular merchandise purchases to avoid high interest rates.
3. Pay More Bills With Credit Cards
Shift your payment methods to free up cash in your checking account. Pay rent, utilities, or insurance premiums with your credit card instead of cash.
Service providers may charge convenience fees for credit card payments. They prefer cash because credit card processing costs them money. Negotiate the fee or compare it to cash advance costs.
Only use this method if the convenience fee is lower than cash advance charges.
4. Find Someone Who Needs to Use Credit
A friend or family member who needs to make purchases can help. Offer to buy what they need with your credit card. They give you cash or transfer money to your account in return.
Peer-to-peer payment apps make these transactions simple. Popular options include Zelle, Cash App, and Apple Pay. Some apps explicitly prohibit credit card liquidation, so check their terms first.
Venmo and PayPal have policies against using their services to convert credit to cash. Choose apps that allow credit card funding without restrictions.
5. Buy Prepaid Gift Cards
Purchase prepaid Visa or Mastercard gift cards with your credit card. You can then sell these cards for cash at slightly below face value.
Gift card exchange websites and apps make selling easy. You might get 85-95% of the card’s value in cash. While you lose some money, the cost is often less than cash advance fees.
Buy gift cards for popular retailers if you go this route. Target, Amazon, and Walmart cards sell quickly at good rates.
6. Work With a Credit Counselor
If you’re constantly short on cash, you might have a bigger problem. Our partner Cambridge Credit Counseling can help you create a sustainable budget. Credit counselors review your income and expenses to find solutions.
They can negotiate lower interest rates with your creditors. You make one monthly payment instead of juggling multiple bills. Credit counseling helps you avoid needing emergency cash in the future.
Better Alternatives to Cashing Out Your Credit Card
Before liquidating your credit card, consider other ways to access cash. These alternatives often have lower costs and fewer risks.
Cut unnecessary expenses. Review your spending for the past month. Cancel subscriptions you don’t use. Skip dining out and entertainment for a few weeks. Small cuts add up to significant savings quickly.
Borrow from friends or family. Loved ones may offer interest-free loans for emergencies. Create a written repayment plan to maintain good relationships. Treat personal loans as seriously as bank loans.
Take out a personal loan. Personal loans from banks or credit unions typically have lower interest rates. APRs range from 6-36%, often less than credit card rates. You get a fixed repayment schedule and predictable monthly payments.
Sell items you no longer use. Host a yard sale or list items online. Electronics, furniture, and collectibles sell quickly. You convert unused possessions into cash without taking on debt.
Pick up a side gig. Temporary work through gig economy apps provides quick cash. Drive for rideshare services, deliver food, or complete freelance projects. You earn money instead of borrowing it.
Making the Right Choice for Your Situation
Credit cards can provide emergency cash when you need it most. Cash advances are quick but expensive. Alternative methods often save you money in fees and interest.
Carefully assess your situation before choosing a method. Consider how quickly you need the money. Calculate the total cost including fees and interest. Choose the option with the lowest overall expense.
What works for one person may not work for you. Your credit limit, available alternatives, and urgency all factor into your decision.
If you’re struggling with credit card debt from past cash advances, our partner Cambridge Credit Counseling offers debt management plans. They negotiate with creditors to lower your interest rates and create affordable payment plans.