How To Withdraw [A Large Amount of] Cash From Online Bank Account

By Harry Sit

Merchants Bank: teller stands

Last time I wrote about How To Deposit Cash To Online Bank Account. This time I’m writing about the opposite: when you use an online bank for your main checking account, how do you withdraw cash, especially a large amount?

If you answer ATM or cash back with debit card purchase at a store, that’s too easy. There is a limit on how much you can withdraw from ATMs in a 24-hour period. It’s usually $500 or so. There’s also a limit on how much cash back you can get with each purchase at a store. What if you need more?

You may ask why would you need more than $500 in cash. Maybe you are buying something on Craigslist and they only want cash. Maybe you are taking the cash overseas because the mighty dollar is the preferred hard currency there.

It would be cheating if you transfer the money to a local, brick-and-mortar bank account before withdrawing it there, because then you are not withdrawing cash from an online bank account. You are withdrawing from a local, brick-and-mortar bank account. The whole point of using an online bank for your checking account is not having to keep an account at a local, brick-and-mortar bank, although you could have a local bank account that’s better than free if you are with the right bank (see previous post A Basic Checking Account That Pays More Than A High Yield Savings Account).

Answer: Debit Card Cash Advance

I don’t know if that’s the official term but that’s what it is. You walk into a bank, any bank or credit union; you don’t need an account there. You tell the teller:

“I’d like to take a cash advance against my Visa card.” (or MasterCard, if your debit card is a MasterCard)

Don’t mention it’s a debit card. You will only confuse them. As long as the card carries a Visa or MasterCard logo, they will do it the same way whether it’s credit or debit. They will ask for your ID. Then they will run your card on a terminal. It’s very similar to how you swipe your card when you buy something at a store. You sign the slip before they give you the cash.

The bank doesn’t charge you a fee just as a store doesn’t charge you a fee when you buy stuff. Think of it as buying cash. In fact the bank that gives you the cash advance will earn a fee from your bank for their service. So they happily do it for you.

There is a dollar limit for this as well, but it’s much higher than the daily ATM withdrawal limit. The limit on my account is $2,000 per day. If you want to find out what your limit is, ask your bank about the daily purchase limit on your debit card. Don’t ask the customer service rep about cash advance against the debit card. They often don’t know about it. When I asked my credit union about it, the service rep told me it was not supported although I did it several times already.

As far as your bank is concerned, the cash advance looks just like a purchase. Theoretically it’s possible for a bank to block cash advance on debit cards but it’s rare. Before you rely on it for a large withdrawal, try it for $100 first.

[Photo credit: Flickr user Minneapolis Institute of Arts]

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Posted on January 21, 2013 under Banking and Credit Cards. Keywords: , , .

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12 Comments on How To Withdraw [A Large Amount of] Cash From Online Bank Account

  1. indexfundfan on January 21, 2013
     

    I find it hard to believe that the megabanks will do this without additional cost to me.

    Imagine if I were to show up at the doorsteps of BofA with a third party debit card to get money. I have two choices — either go to the ATM machine or to the teller inside the branch (assuming office hours).

    If I go to the ATM machine, I will get charge a fee by BofA for the ATM withdrawal. On the other hand, if I go to the teller, I can get cash without additional fees? I think BofA is even charging some of its own customers the privilege of talking to the teller in the branch if they do it too often.

  2. Bucky on January 21, 2013
     

    I thought retailers/merchants had to pay a fee when a customer uses a debit card? The fee doesn’t apply for cash advances?

  3. Harry on January 21, 2013
     

    indexfundfan – Shh… Don’t tell them you are trying to beat the ATM fee. It works.

    Bucky – Retailers pay a fee when you use a debit card or a credit card. Banks dispensing cash advance are just the opposite: they earn a fee.

  4. Sandra on January 24, 2013
     

    There is no free lunch here. Your credit card provider will start charging you interest on the cash advance beginning on the day of the transaction. The annualized rate will be up to 22% depending on your particular card (read the fine print details). There is no grace period and you will pay this interest charge even if you normally always pay off your credit card balance every month.

  5. Sandra on January 24, 2013
     

    On second thought, please disregard my last post. I was thinking of credit cards, not debit cards.

  6. Harry @ PF Pro on January 24, 2013
     

    Not that I don’t believe you but I went to try this on Monday. Banks were closed though haha. Apparently there is a holiday for MLK that my work doesn’t ever seem to celebrate ;)

  7. Harry on January 24, 2013
     

    Harry – You are doing it right. I said try it for $100 first. Then you will be prepared when you really need it.

  8. planetjanet on January 26, 2013
     

    I’ve posted about this technique as well, my own bank (USAA) actually suggested it when I called them up to raise my ATM limit. I was buying a used car and planned on doing repeated ATM withdrawals, and they were very aware of the exact terminology (“debit card cash advance”) and stressed that there would be no fees. The funds cleared immediately as cash into the seller’s account.

    It’s an excellent trick that should be more widely known.

  9. Slotzy on January 28, 2013
     

    Does this work at banks only? How about cash advance tellers at casinos? I’d like to beat the ATM charges there too which are more than at normal terminals.

  10. White Coat Investor on February 1, 2013
     

    This isn’t that big a deal. You just call the bank and ask them to lift the limit for the day. You haven’t lived until you’ve bought a car or a boat with a 6 inch tall stack of 20s you took out of an ATM that morning.

    I tried the debit card cash advance for a refinancing and there was an issue (I can’t remember what). But there wasn’t any problem going outside to the ATM and pulling out $4K for closing costs apparently.

  11. Bucky on February 1, 2013
     

    I tried this today. I walked to the nearest bank and asked if they do cash advances on my Mastercard. They said, “Yes. Are you a customer at U.S. Bank?” “No.” “Sorry, you have to be a customer at U.S. Bank. Would you like to open an account today?” “No thanks.”

    Bottom line, this isn’t very useful if you have to have an account with the brick and mortar. Can people list which major banks will do the cash advance without having an account with them?

    Otherwise White Coat Investor’s suggestion to call your online bank to lift the ATM limit for one day is better (if it works).

  12. Harry on February 1, 2013
     

    Bucky – The teller made that up. Try a different branch or talk to the manager. MasterCard rules require all issuers give cash advance to all cardholders. They can’t discriminate on whether you have an account with the bank or not. US Bank is a MasterCard issuer.

    MasterCard Rules, bottom of page 303 in the PDF.

    Rule 8.10.3 on page 189 says they can’t charge a fee for it.

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