Credit cards provide more than just a way to shop online or in-store. In the Philippines, they can also act as a source of instant cash through a feature called a cash advance. While this option is convenient, it’s essential to understand the process, associated costs, and potential financial impact. This detailed guide will walk you through everything you need to know about withdrawing cash from a credit card.

What is a Credit Card Cash Advance?

A credit card cash advance is a feature that allows you to withdraw cash using your credit card instead of accessing funds from a bank account. This borrowed money comes directly from your available credit limit and is subject to specific terms, such as fees and higher interest rates.

• When to Use It: Cash advances are best reserved for emergencies or situations where other financing options are unavailable. Examples include unexpected medical expenses, urgent travel costs, or unforeseen repairs.
• Key Considerations: Cash advances do not come with the interest-free period typically offered for regular purchases. Interest starts accumulating immediately, and fees can quickly add up.

Steps to Withdraw Cash Using Your Credit Card

1. Check Your Credit Card Terms

Before proceeding, take the following steps to avoid surprises:

• Understand Your Cash Advance Limit: This is usually a percentage (e.g., 30-50%) of your total credit limit. Check your statement or online banking app for this information.
• Review Fees and Interest Rates: Each bank has specific fees and interest rates for cash advances. Be aware of these to calculate the real cost of withdrawing cash.
• Eligibility: Some credit card types or issuers may restrict cash advances. Contact customer service if you’re unsure.

2. Locate an ATM

You can withdraw a cash advance from most ATMs in the Philippines that support your credit card network (Visa, Mastercard, JCB, etc.).

• Using Your Issuer’s ATM: Using an ATM operated by your credit card provider (e.g., BDO, BPI) may help you save on third-party ATM fees.
• Choosing the Right Location: Pick a safe and well-lit ATM, especially when withdrawing large amounts.

3. Prepare Your Credit Card PIN

A PIN (Personal Identification Number) is essential for completing a cash advance transaction at an ATM.

• Requesting a PIN: If you haven’t set up a PIN, contact your bank. They may send it via mail, SMS, or allow you to set it up through their online platform.
• Forgot Your PIN? Most banks have a quick recovery process. Call their hotline or access your account online to reset it.

4. Perform the Transaction

The withdrawal process is straightforward but differs slightly from withdrawing cash from a debit card.

1. Insert Your Credit Card into the ATM.
2. Enter Your PIN when prompted.
3. Select the “Credit” or “Cash Advance” Option. Do not select “Savings” or “Checking.”
4. Enter the Amount. Ensure the amount does not exceed your cash advance limit or the ATM’s daily withdrawal limit.
5. Confirm the Transaction. The ATM will dispense the cash, and you’ll receive a receipt. Keep this for your records.

5. Keep Track of Your Transaction

After withdrawing cash:

• Monitor Your Statement: Double-check your credit card statement or online banking app to ensure the transaction is recorded correctly.
• Plan for Repayment: Cash advances accrue interest daily, so aim to repay the amount as quickly as possible.

Costs to Consider

Using a credit card cash advance comes with significant costs. Here’s what you should factor in:

1. Cash Advance Fee

This fee is usually charged as a percentage of the withdrawn amount or a flat rate, whichever is higher. For example:

• BDO: 5% of the transaction amount or PHP 500.
• BPI: 3% of the transaction amount or PHP 300.

2. High Interest Rates

Interest rates for cash advances are higher than those for regular credit card purchases. They often exceed 3% per month and start accruing immediately after the transaction.

3. ATM Fees

Third-party ATMs may charge an additional withdrawal fee, typically ranging from PHP 15 to PHP 50 per transaction. Use your bank’s ATM when possible to save on these costs.

4. Impact on Credit Limit

The amount withdrawn reduces your available credit, potentially limiting your ability to make purchases or access other credit card features.

Best Practices for Cash Advances

Use Cash Advances as a Last Resort

Due to the high costs, consider cash advances only in genuine emergencies. Explore alternatives such as:

• Borrowing from friends or family.
• Taking a personal loan with lower interest rates.
• Using other savings or investments.

Repay Quickly

Since interest accrues daily, repaying the cash advance amount promptly minimizes the financial burden. Prioritize this repayment over other expenses.

Consider Alternatives

If you anticipate needing cash frequently, look into options like:

• A personal loan with lower interest rates.
• A credit line product specifically designed for cash withdrawals.

Top Banks Offering Credit Card Cash Advances in the Philippines

Here’s a closer look at popular banks and their cash advance terms:

1. BDO Unibank
   • Cash Advance Fee: 5% of the amount withdrawn or PHP 500, whichever is higher.
   • Interest Rate: ~3% per month.
   • Access Points: BDO ATMs nationwide or any ATM with a Visa or Mastercard logo.
2. BPI (Bank of the Philippine Islands)
   • Cash Advance Fee: 3% of the amount withdrawn or PHP 300, whichever is higher.
   • Interest Rate: ~3.25% per month.
   • Convenience: Easily access cash through BPI ATMs or third-party ATMs.
3. Metrobank
   • Cash Advance Fee: 3% of the amount withdrawn or PHP 600, whichever is higher.
   • Interest Rate: Varies by card type.
   • Perks: Metrobank cardholders enjoy wide ATM access across the Philippines.

Final Thoughts

Withdrawing cash from a credit card in the Philippines is a convenient option during emergencies but comes with significant costs. Always familiarize yourself with the fees and terms, and use cash advances sparingly to avoid unnecessary debt. If you’re looking to maximize the benefits of your credit card while minimizing costs, explore other options such as no-annual-fee credit cards, rewards cards, cashback cards, or travel credit cards.

Check out these helpful resources to find the best credit card for your needs:

• Credit Cards with No Annual Fee
• Rewards Credit Cards
• Cashback Credit Cards
• Travel Credit Cards

By choosing the right credit card and managing your finances wisely, you can unlock more value and financial flexibility while avoiding unnecessary expenses.