Yes, you can take cash off your credit card, but it costs more than a purchase
You can withdraw cash from your credit card at an ATM, bank teller, or through a cash advance at a store. The transaction is called a cash advance. Unlike a purchase, a cash advance starts charging interest immediately — there is no grace period — and the interest rate is almost always higher than your purchase rate. You also pay an upfront fee, usually 3 to 5 percent of the amount you withdraw.
The cash advance limit on your card is often lower than your credit limit. Your card issuer sets this separately, and you may not know what it is until you try to withdraw. Some issuers let you check it in your online account or by calling customer service.
Key Takeaways
- Cash advances charge interest from the day you withdraw, with no grace period like purchases have.
- The interest rate for cash advances is typically 2 to 5 percentage points higher than your purchase APR.
- You pay an upfront fee of 3 to 5 percent of the cash amount, charged to your account immediately.
- Your cash advance limit is separate from your credit limit and is often much lower.
- Payments go toward your lowest-rate debt first, so cash advance balances stay on your card longer.
Where you can withdraw cash and what each method costs
An ATM is the fastest option. Insert your card, enter your PIN, and withdraw up to your cash advance limit. The ATM may charge its own fee — typically $2 to $5 — on top of your card issuer's fee. If the ATM belongs to a different bank or network than your card issuer, you may pay both an issuer fee and an ATM operator fee.
A bank teller can also process a cash advance. Walk into any branch of your card issuer's bank or a partner bank, give them your card, and request the cash. Teller cash advances usually do not charge an ATM operator fee, but your card issuer's cash advance fee still applies.
Some retailers offer cash back at checkout when you use your credit card. This is not a cash advance — it is a purchase, so it does not trigger the higher interest rate or cash advance fee. However, not all retailers offer this, and limits vary. Grocery stores and pharmacies are most likely to allow it.
A few card issuers allow you to transfer cash to your bank account through their mobile app or website. This counts as a cash advance and carries the same fees and interest rate as an ATM withdrawal.
How interest and fees add up on a cash advance
Suppose you withdraw $500 in cash. Your card issuer charges a 4 percent cash advance fee, so you owe $520 immediately. That $20 fee posts to your account the same day.
Interest begins accruing the next day. If your cash advance APR is 24 percent, you owe about $10 per month in interest on the $500 balance alone — not counting the $20 fee. After one month, your balance is roughly $530. If you pay only the minimum payment, most of that payment goes toward the fee and interest, not the principal.
The order in which your payment is applied matters. Credit card issuers are required to apply payments to the highest-rate balance first. If your purchase APR is 18 percent and your cash advance APR is 24 percent, your payment goes toward the cash advance first. This means any remaining purchase balance keeps accruing interest at 18 percent while you pay down the cash advance. The longer the cash advance sits, the more you pay.
How a cash advance affects your credit score and available credit
A cash advance counts as a balance on your credit card, just like a purchase does. It increases your credit utilization ratio — the amount of your total credit limit you are using. A higher utilization ratio can lower your credit score, especially if you go above 30 percent of your limit.
Your available credit shrinks by the cash advance amount. If your credit limit is $2,000 and you withdraw $500 in cash, you have $1,500 left to spend. This reduced available credit stays in place until you pay off the cash advance balance.
The cash advance itself does not show separately on your credit report. It appears as part of your credit card balance. However, the higher interest rate and fees mean the balance grows faster, which can keep your utilization high for longer.
When a cash advance makes sense and when it does not
A cash advance is useful only in specific situations. If you need cash for an emergency and have no other option — no savings, no access to a personal loan, no ability to use a debit card — a short-term cash advance may be better than missing a bill or going without. The key is to pay it back as quickly as possible to minimize interest.
A cash advance does not make sense if you have other options. A personal loan from a bank or credit union typically charges 6 to 36 percent APR with no upfront fee. A payday loan charges high fees but may be cheaper than a cash advance if you repay within two weeks. Borrowing from family or friends, if possible, costs nothing. Even using a debit card or asking a retailer for cash back is better than a cash advance.
Do not use a cash advance to pay off other debts unless the math clearly works. If you have a $1,000 balance on a 15 percent purchase card and you take a $1,000 cash advance at 24 percent with a $40 fee, you have traded a lower-rate debt for a higher-rate debt plus a fee. You would owe $1,040 on the cash advance while the original balance is paid off, leaving you worse off.
How to pay off a cash advance faster
Pay more than the minimum payment. Minimum payments are calculated to keep you in debt as long as possible. A $500 cash advance with a 24 percent APR and a $20 fee requires a minimum payment of roughly $15 to $25 per month. At that rate, you will pay it off in 24 to 36 months and pay $150 to $250 in interest alone.
If you can pay $100 per month instead, the balance is gone in about six months with roughly $30 in interest. The difference is substantial. Set up a payment plan before you withdraw the cash, so you know what you can afford.
Pay the cash advance before making other purchases. Since payments go toward the highest-rate balance first, any new purchases you make will accrue interest at the purchase rate while the cash advance sits. Avoid using the card until the cash advance is paid off.
Alternatives to a credit card cash advance
A personal loan from a bank, credit union, or online lender usually has a lower APR than a cash advance and no upfront fee. Rates range from 6 to 36 percent depending on your credit score and the lender. The loan is fixed — you know exactly how much you owe and when it will be paid off — unlike a credit card balance that can grow if you keep using the card.
A line of credit from your bank works similarly to a personal loan but lets you borrow only what you need. You pay interest only on the amount you use, not the full credit line.
A 0 percent balance transfer card lets you move an existing balance to a new card with no interest for 6 to 21 months. This does not help you get cash, but if you already have a cash advance balance, transferring it to a 0 percent card can save thousands in interest. Balance transfers charge a fee of 3 to 5 percent, but the fee is usually lower than the interest you would pay.
If you have a 401(k) or similar retirement account, some plans allow you to borrow against your balance. The interest rate is typically prime plus 1 to 2 percent, much lower than a cash advance. However, if you leave your job, the loan must be repaid quickly or it becomes a taxable withdrawal.
Frequently Asked Questions
Does taking a cash advance hurt my credit score?
Yes, temporarily. A cash advance increases your credit utilization ratio, which can lower your score by 10 to 50 points. The impact fades as you pay down the balance. However, if the cash advance causes you to miss a payment or go over your credit limit, the damage is much worse and lasts longer.
Can I use a cash advance to pay off another credit card?
Technically yes, but it is almost never a good idea. You pay a cash advance fee on top of a higher interest rate. A balance transfer to a 0 percent card or a personal loan is cheaper. If you must use a cash advance to pay off debt, do the math first to make sure you are not paying more in fees and interest than you would on the original card.
What happens if I reach my cash advance limit?
The ATM or teller will decline the transaction. Your cash advance limit is set by your card issuer and is separate from your credit limit. You can call customer service to ask if your limit can be increased, but there is no may provide. Some issuers do not allow increases on cash advance limits.
Do I have to pay interest on a cash advance if I pay it back right away?
No grace period exists for cash advances. Interest starts accruing the day you withdraw the cash. If you withdraw $500 on Monday and pay it back on Tuesday, you still owe one day of interest. The upfront fee is charged regardless of how quickly you repay.
Can I dispute a cash advance fee?
You can contact your card issuer and ask them to waive the fee, especially if it is your first cash advance or if you have been a long-standing customer with a good payment history. Some issuers will remove the fee as a courtesy. However, they are not required to, and most will not. The fee is disclosed in your card's terms and conditions.