Q: When I was at Walmart yesterday the person in front of me at checkout paid with a Discover credit card and received money back. How can I get cash back with a credit card like she did?
A: Is it possible to get cash back with credit? Yes, but only one issuer offers this feature without any additional fees and that’s Discover. The issuer offers a “cash over purchases” feature.
How to get cash over purchase amount with Discover
|Use your Discover card to pay for your purchases at the register.|
|Choose how much cash you'd like over the purchase amount.|
|You can get up to $120 in cash over your purchases every 24 hours.|
Using a Discover card, you can get cash back when you make purchases at participating supermarkets. After you swipe your card, it will ask if you want cash back and you can get up to $120 per day.
Is there a catch? Nope! Discover counts this as a normal purchase, which is quite a deal for consumers. The amount of cash you request is simply added to your purchase. For example, if you made a $80 purchase at Kroger and opted to receive $100 cash back, then the total purchase would be $180. Don’t worry because it is not counted as a dreaded cash advance – which is a huge benefit, since cash advances usually gouge the customer with some very expensive fees (outlined below) .
Meanwhile, with most other credit cards you may be surprised to learn that it is already likely to have a PIN (four digit personal identification number) associated with it. Not every bank issues you the number automatically, but most do. For example, when I opened up my American Express card, a 4 digit PIN came in the mail a couple weeks later to use with it.
If you don’t know your PIN you can call up your card’s customer service and request it; they’re mail a new one to you which should arrive within 7-10 days.
Once you know this number, you can use your credit card to get cash from ATMs as well as from grocery stores like Walmart when making a purchase… but, unlike Discover, there are fees involved.
The amount of cash you can get will be just a fraction of your overall credit limit. With most banks, they limit it to $300 or $400 per day. And the max you can get total will be whatever your cash advance limit is (which is almost always much lower than your credit limit).
But before you do this, be warned that it’s a terrible idea for a number of reasons
When you use your credit card like an ATM card, the transaction will be classified as a cash advance. That means some bad news:
- There is absolutely no grace period provided. You will incur interest charges starting immediately from the transaction date, even if you pay your next statement in full (the grace period is typically 25 days for purchases, so no grace with cash advances is painful).
- The APR is usually quite a bit higher. With most banks, the interest rates on cash advances are significantly higher than purchases or balance transfers. Typically you’re looking at around a 25% to 30% APR.
- Cash advance fees. These typically run 3% of the amount withdrawn. Ouch. Oh, and if getting dinged with fees isn’t bad enough, you might be judged. By who? Your credit card company. Whether it’s fair or not, people who do cash advances are often viewed as being a higher credit risk. Depending on the circumstances, this red flag might mean your account will be more scrutinized in the future when it comes to things like your credit limit amount.
- Possible credit impairment. While issuers won’t say this in their marketing material or in the terms and conditions, taking a cash advance can be a big red flag indicating you are not on good financial footing. Even though the card company takes their pound of flesh in terms of an upfront fee and higher APR, they get very nervous about customers not being able to pay them back. So if you go this route very often you may find your regular APR going up – as in risk-based pricing.
Better technique – use a 0% credit card offer
If you have a Visa, MasterCard or American Express, you will definitely be paying fees and interest if you get cash back at store using your credit card. If you can wait a few days for your money, instead you should consider signing up for a card promotion that comes with 0% on purchases.
Why is that? That’s because if you get a new card that comes with a 0% intro APR on purchases, you can use it to send money by Paypal or similar services.
For example, if you need cash to pay your roommate, you can send it thru Paypal instead.
Since Paypal payments are typically classified as purchases, it means you will probably be avoiding the higher expense of doing a cash advance. Paypal charges a one-time fee of around 3%, which is a heck of a lot less than paying your credit card company 25% interest plus fees on top of that.
Written or last updated April 11, 2016