You can withdraw cash from a credit card, but it is not the same as using the card to buy something
A cash advance is a withdrawal of money from your credit card's available credit line. You take out cash at an ATM, bank teller, or through a convenience check, and the amount borrowed shows up on your credit card bill just like a purchase would. The key difference: cash advances come with their own fees and interest rate, both usually higher than what you pay for regular purchases.
Most credit cards allow cash advances, but the amount you can withdraw is limited to a portion of your credit limit — often 20 to 50 percent, depending on your card issuer. You find this limit in your cardholder agreement or by calling the number on the back of your card.
The cost of a cash advance starts immediately. Unlike purchases, which may have a grace period before interest kicks in, cash advances begin accruing interest the moment you withdraw the money. There is no interest-free window.
Key Takeaways
- Cash advances charge a fee (usually 3 to 5 percent of the amount withdrawn) plus a higher interest rate than regular purchases, with interest starting immediately.
- Your cash advance limit is typically 20 to 50 percent of your total credit limit and appears in your cardholder agreement or online account.
- You can withdraw cash at ATMs, bank tellers, or through convenience checks, but each method has the same fees and interest rate.
- Paying off a cash advance should be your priority because the interest rate is usually 5 to 10 percentage points higher than your purchase APR.
The fees and interest rates attached to cash advances
A cash advance fee is a flat percentage of the amount you withdraw. Most cards charge between 3 and 5 percent, though some charge as much as 10 percent or a flat dollar amount (whichever is greater). If you withdraw $500 at a 4 percent fee, you pay $20 immediately. That $20 is added to your credit card balance.
The interest rate on a cash advance is separate from your purchase APR. While your regular purchases might carry an APR of 18 percent, your cash advance APR could be 25 percent or higher. This rate is listed in your cardholder agreement under "Cash Advance APR" or "Other APRs." Check your agreement or log into your online account to see your card's specific rates.
Interest on a cash advance accrues daily from the moment you withdraw the money. If you withdraw $500 at a 25 percent APR, you owe roughly $3.42 in interest on day one, $6.85 by day two, and so on. The longer the balance sits, the more expensive it becomes.
Where you can withdraw cash and how each method works
An ATM withdrawal is the most common method. You insert your credit card, enter your PIN (which you may need to set up if you have not used cash advances before), and withdraw cash up to your daily limit. Daily limits vary by card but often range from $200 to $500. The fee applies immediately, and interest begins accruing.
A bank teller withdrawal works at any bank or credit union branch, even if it is not your own bank. You present your credit card and request a cash advance. The teller processes it on the spot. This method has no daily limit (you are limited only by your cash advance limit), but the fee and interest rate are identical to an ATM withdrawal.
Convenience checks are blank checks issued by your credit card company that you can write against your credit card account. You write a check to yourself or a payee, deposit it, and the amount is treated as a cash advance. Convenience checks often come with a separate fee (sometimes higher than ATM fees) and the same interest rate. They are useful if you need a large amount and want to avoid multiple ATM visits, but they are slower because you have to wait for the check to clear.
How a cash advance affects your credit and your account
A cash advance counts as a balance on your credit card, so it raises your credit utilization ratio — the percentage of your available credit you are using. If your credit limit is $5,000 and you take a $1,000 cash advance, your utilization jumps to 20 percent. Higher utilization can lower your credit score, even if you pay the balance in full the next month.
The cash advance also counts toward your total credit card balance for minimum payment purposes. If your statement shows a $1,000 cash advance plus a $500 purchase, your minimum payment is calculated on the full $1,500, not just the purchase portion.
Cash advances do not trigger fraud alerts or require special permission the way some large purchases do. However, if you have not used a cash advance on your card before, your card issuer may flag the first one as unusual activity. You may receive a call or email confirming it was you. This is normal and does not affect your ability to complete the withdrawal.
When paying off a cash advance should be your priority
Because cash advance interest rates are higher than purchase rates, paying off the cash advance first makes financial sense. If you have a $500 cash advance at 25 percent APR and a $500 purchase at 18 percent APR, both on the same card, your payment should go toward the cash advance balance first.
Most card issuers apply your payment to the lowest-interest balance first (the purchase), which means the cash advance sits and accrues expensive interest. You can call your card issuer and request that your payment be applied to the cash advance instead, but you have to make this request each time you pay. Some issuers allow you to set a payment preference in your online account.
The fastest way to stop the interest clock is to pay off the entire cash advance balance as soon as possible. Even paying an extra $50 or $100 toward it each month reduces the total interest you will owe.
Alternatives to a credit card cash advance
A personal loan from a bank or credit union often has a lower interest rate than a cash advance, especially if you have decent credit. You borrow a fixed amount, receive it as a lump sum, and repay it over a set period. The interest rate is fixed and known upfront, so there are no surprises.
A payday loan or title loan is faster to obtain than a personal loan but typically carries much higher interest rates and fees. These are short-term loans meant to bridge a gap until your next paycheck. They are more expensive than a cash advance in most cases and should be a last resort.
A balance transfer to a card with a 0 percent introductory APR can help if you already have a cash advance balance on another card. You transfer the balance to the new card and pay no interest during the intro period (usually 6 to 21 months). Balance transfers have their own fee (typically 3 to 5 percent), but if you can pay off the balance during the intro period, you save on interest.
Borrowing from a friend or family member, negotiating a payment plan with a creditor, or using a line of credit from your bank are other options that may carry lower or no interest.
Frequently Asked Questions
Does taking a cash advance hurt my credit score?
A cash advance can lower your score temporarily because it raises your credit utilization ratio. The impact is usually modest and temporary — your score typically recovers once you pay down the balance. However, if you miss payments on the cash advance, the damage is more serious and longer-lasting.
Can I use a cash advance to pay off another credit card?
Technically yes, but it is expensive. You pay the cash advance fee plus a higher interest rate, so you are paying more to move debt around. A balance transfer or personal loan is usually cheaper. Some card issuers also block cash advances intended for this purpose.
What happens if I cannot pay back the cash advance?
The unpaid balance stays on your credit card and accrues interest. If you miss payments, your card issuer reports it to credit bureaus, your credit score drops, and you may face late fees. The card issuer can also raise your interest rate or close your account. Contact your issuer immediately if you cannot pay to discuss options.
Is there a daily limit on how much I can withdraw?
Yes. ATM withdrawals have a daily limit set by your card issuer, usually $200 to $500. Bank teller withdrawals and convenience checks are limited only by your cash advance limit, which is typically 20 to 50 percent of your credit limit. Check your cardholder agreement or call your issuer to confirm your limits.
Can I get a cash advance if my credit is bad?
If you already have the credit card, you can take a cash advance regardless of your current credit score. Your cash advance limit was set when you opened the account and does not change based on recent credit activity. However, your issuer may lower or freeze your limit if you miss payments.