Yes, you can use a credit card at an ATM, but it costs more than you think

Most credit cards let you withdraw cash from an ATM using your PIN, a feature called a cash advance. The moment you do, your card issuer treats it differently from a regular purchase — you start paying interest immediately, there is no grace period, and you pay a fee just for taking the money out. For most people, this is an expensive way to get cash and should be a last resort, not a habit.

The reason credit card companies charge so much for cash advances is that they see the risk differently. When you buy something with your card, the merchant guarantees the transaction. When you pull cash from an ATM, there is no merchant, no receipt to dispute, and no way for the card issuer to recover the money if something goes wrong. They price that risk into the fee and the interest rate.

Key Takeaways

  • Cash advances charge a fee (usually 3 to 5 percent of the amount) plus a higher interest rate than regular purchases, with interest starting immediately.
  • Your credit card's regular grace period does not apply to cash advances — interest accrues from day one, even if you pay the full balance when your statement arrives.
  • The ATM operator may also charge you a separate fee (typically $2 to $3) on top of your card issuer's fee.
  • Debit cards, bank accounts, and credit unions offer much cheaper ways to get cash, and should be your first choice.

How much a cash advance actually costs

When you take a cash advance, you pay two separate fees. First, your credit card issuer charges a cash advance fee, usually between 3 and 5 percent of the amount you withdraw. On a $200 withdrawal, that is $6 to $10 right away. Second, the ATM operator — whether it is your bank, another bank, or an independent ATM — may charge you an additional $2 to $3.

Then comes the interest. Your card issuer charges a higher interest rate on cash advances than on regular purchases. While a purchase might carry an APR (annual percentage rate) of 18 percent, a cash advance might be 22 or 25 percent. Unlike purchases, which have a grace period of 20 to 25 days before interest kicks in, cash advances start accruing interest on day one. If you withdraw $200 and pay it back in two weeks, you will still owe interest for those two weeks.

A concrete example: you withdraw $200 from an ATM using your credit card. Your issuer charges a 5 percent cash advance fee ($10) and an ATM operator fee ($2.50). Your cash advance APR is 24 percent. If you pay back the $200 in two weeks, you will owe roughly $2 in interest on top of the $12.50 in fees — a total cost of about $14.50 to borrow $200 for 14 days. A payday loan would be cheaper.

Why your regular grace period does not apply

One of the benefits of a credit card is the grace period — the time between when you make a purchase and when interest starts accruing. If you charge $500 on day one of your billing cycle and pay it in full by the due date, you pay zero interest. That grace period does not exist for cash advances.

The moment the ATM dispenses your cash, interest begins accruing at the cash advance rate. This is true even if you pay the full amount back the next day. The card issuer sees a cash advance as a loan from day one, not as a purchase you might pay off interest-free. This is one of the biggest surprises for people using a credit card at an ATM for the first time.

When a cash advance might make sense

Cash advances are expensive, but there are rare situations where they are the least bad option. If you have an emergency and need cash immediately — a car repair, a medical bill, or a situation where only cash is accepted — and you have no other way to get money, a cash advance might be better than missing a payment on something else or going without.

The key word is "emergency." If you are regularly using your credit card at an ATM to get spending money, that is a sign you are spending more than you earn. In that case, the real problem is not the ATM fee — it is that you need to adjust your budget. A cash advance will only make that problem worse by adding debt and interest on top of what you already owe.

If you do take a cash advance, pay it back as fast as you can. Every day the balance sits there, interest is accruing at a rate higher than your regular purchases. Prioritize it over other credit card balances if you can.

Better ways to get cash without a credit card

If you need cash, your first choice should be a debit card or a withdrawal from your bank account. There is no fee, no interest, and no risk — you are only spending money you already have. If you do not have a debit card, most banks let you withdraw cash at the teller window for free, or use their ATM network for free.

If you do not have a bank account, a credit union is often a better choice than a credit card. Many credit unions offer free or low-cost ATM access to members, and some will waive fees for members of other credit unions in their network. Credit unions also tend to charge lower fees overall than banks.

If you are in a bind and need cash but do not have access to your bank account, ask a friend or family member for a short-term loan. It costs nothing and keeps you from going into debt. If that is not an option, a small personal loan from a credit union or bank is cheaper than a credit card cash advance, even though it takes longer to process.

How to check your cash advance limit and APR

Your credit card issuer sets a separate limit for cash advances, which is usually lower than your overall credit limit. You might have a $5,000 credit limit but only a $1,000 cash advance limit. This limit is set by the issuer based on your credit history and account activity.

You can find your cash advance limit and APR in your cardholder agreement, which you received when you opened the account. If you do not have it, log into your online account or call the customer service number on the back of your card. The representative can tell you your cash advance limit, your cash advance APR, and your cash advance fee in one call. It is worth knowing these numbers before you ever need to use them.

What happens to your credit score when you take a cash advance

A cash advance does not directly hurt your credit score the way a missed payment does, but it can indirectly damage it. When you take a cash advance, your credit utilization — the percentage of your available credit you are using — goes up. If you have a $5,000 credit limit and take a $1,000 cash advance, your utilization jumps to 20 percent. High utilization can lower your credit score, even if you pay the balance back quickly.

The bigger risk is that a cash advance can become a habit. If you keep taking cash advances and carrying a balance, your utilization stays high and your score stays low. Over time, this can make it harder to get approved for new credit or to get better interest rates on loans.

Frequently Asked Questions

Can I use any credit card at any ATM?

Most credit cards work at most ATMs, but some ATMs may not accept all card types. ATMs operated by your card issuer's bank usually work without issues. ATMs operated by other banks or independent operators may decline your card or charge a higher fee. Check your cardholder agreement or call customer service to see which ATM networks your card works with.

Is a cash advance the same as a balance transfer?

No. A cash advance is when you withdraw cash from an ATM or bank teller. A balance transfer is when you move debt from one credit card to another. Balance transfers often have lower introductory rates but charge a fee (usually 3 to 5 percent). Cash advances have higher fees and higher interest rates from day one. Both are expensive, but for different reasons.

What if I cannot pay back a cash advance right away?

The balance will accrue interest at your cash advance APR until you pay it off. If you carry the balance for months, the interest can add up quickly. Prioritize paying off the cash advance before making other credit card purchases, since the interest rate is higher. If you are struggling to pay back any credit card debt, contact your card issuer to ask about hardship programs or payment plans.

Do cash advances show up differently on my credit report?

Cash advances do not appear as a separate line item on your credit report — they are part of your overall credit card balance. However, if you carry a cash advance balance for a long time, it contributes to your overall credit utilization and can lower your credit score. Pay it off quickly to minimize the impact.

Can I avoid the cash advance fee by using a different type of ATM?

No. Your card issuer's cash advance fee applies no matter which ATM you use. You may be able to avoid the ATM operator's fee by using an ATM owned by your card issuer's bank, but you will still pay your issuer's fee and interest. The only way to avoid the fee entirely is to not take a cash advance.