I’ve been a longtime American Express cardholder – for both personal and business – but this is the first time I have ever received a letter like this one. AmEx automatically enrolled my business credit card for ATM cash withdrawals with an assigned PIN.
The funny thing is that I have had this card for several years, so it’s quite odd that all of a sudden they are automatically adding this feature to my account. They must be under the gun to ratchet up profits to hit their quarterly bonus numbers.
What’s the catch?
Is an American Express cash withdrawal free? Uh, not exactly. Not even close.
It’s true that you can use your credit card at over 800,000 ATM locations around the world. But this benefit comes at a cost and it’s a stiff cost at that. Here’s how it works.
1. Find out how much you can get – As you see in the letter, they don’t specify how much you can get. If you login to your American Express account, click on “Check Your Spending Ability” where you will be taken to a screen like this:
Enter how much you want and submit – it will spit back whether or not the amount is acceptable.
Through trial and error, starting at a $10,000 request, I determined that AmEx was only willing to let me withdraw $1,000. Everything above that amount was denied. What’s up with that?
2. Know the cash advance interest rate – Unlike regular purchases, with cash advances there is no grace period. Interest will begin accruing the very moment you withdraw the cash. Not to mention, the rate will be significantly higher than your purchase APR. For some reason when you tap in to the cash advance line of a credit card it’s treated very differently than just buying something for the same amount. Cash seems to make card issuers nervous for some reason, but they’re a risk averse lot.
That’s what was seen on the application for the Blue Cash card when I wrote this. Note that the rate might have changed since, but using this as an example, it means you would be paying 25.24% starting the same day you get the money.
3. Know the cash advance fees – As if the sky high cash advance interest rate isn’t high enough, you will also be charged a cash advance fee. Here is an example but what your American Express card charges may differ:
4. Find a participating ATM – Their listing can be found at findanamexatm.com. The participating ATM networks are: NYCE, PLUS, STAR, Accel Exchange, AFFN, US Bank, and Fifth Third Bank.
5. Get your money – If any or all of the above hasn’t failed to deter you from getting an American Express cash advance, then go for it. As the saying goes…a fool and his money are soon separated.
Is it ever worth it?
There are very few scenarios I can think of where one could argue that the American Express ATM fees + APR + cash advance fees are a logical choice. Other than some extreme emergency where currency is needed immediately, I can’t think of why anyone would use this feature. Even if you’re drunk and have run out of chips at the casino (actually the banks have already thought of that and most ban cash withdrawals at casinos). It’s simply too expensive and should only be used as a last resort. But not to beat up on them, because all banks charge equally outrageous fees and rates to do ATM withdrawals. Just be aware that they are an option, but an option best avoided.
Last updated April 28, 2015