You can withdraw cash from a credit card, but it costs more than a regular purchase
A cash advance is a withdrawal of money from your credit card account. You can do it at an ATM using your card's PIN, at a bank teller window, or through a cash advance check that comes with your card. The money goes into your pocket or bank account immediately, but the card issuer treats it differently from a purchase — you pay interest right away, you pay a fee upfront, and the interest rate is usually higher.
The key difference: when you buy something with a credit card, you get a grace period (usually 21 to 25 days) before interest starts. With a cash advance, interest starts accruing the same day you withdraw the money. There is no grace period.
Key Takeaways
- Cash advances charge a fee (typically 3 to 5 percent of the amount withdrawn) and a higher interest rate than purchases, with interest starting immediately.
- You can withdraw cash at an ATM with your PIN, at a bank teller window, or by depositing a cash advance check, depending on what your card issuer offers.
- Your credit card company sets a separate cash advance limit, which may be lower than your overall credit limit.
- Paying back a cash advance should be your priority because the interest and fees make it the most expensive way to borrow on a credit card.
How the cash advance fee works
When you take a cash advance, the card issuer charges you a cash advance fee at the moment you withdraw the money. This fee is a percentage of the amount withdrawn, typically between 3 and 5 percent, though some cards charge a flat dollar amount instead (for example, $10 minimum). The fee appears on your statement as a separate charge.
If you withdraw $500 and your card charges a 4 percent fee, you pay $20 immediately. That $20 is added to your balance. You owe the $500 plus the $20 fee, and interest starts accruing on both amounts right away.
Some cards offer a promotional period with no cash advance fee for new cardholders, but this is rare. Check your card's terms or call the number on the back of your card to find out what your specific fee is.
Interest rates on cash advances are higher than purchase rates
Your credit card has two interest rates: one for purchases and one for cash advances. The cash advance rate is almost always higher. If your purchase APR is 18 percent, your cash advance APR might be 24 or 28 percent. The card issuer sets both rates and can change them over time.
Interest on a cash advance starts the day you withdraw the money. There is no grace period. If you take out $500 on the 15th of the month, interest begins accruing on the 15th, not on your statement closing date or payment due date. By the time your statement arrives, you already owe interest.
The longer you carry a cash advance balance, the more interest you pay. A $500 cash advance at 25 percent APR costs roughly $10.42 per month in interest alone, before you pay down the principal. Over a year, that is more than $125 in interest on top of the original $500.
Your cash advance limit is separate from your credit limit
Your credit card issuer sets a cash advance limit that is different from your overall credit limit. If your credit limit is $5,000, your cash advance limit might be $1,000 or $1,500. You cannot withdraw more than this limit, even if you have available credit on the card.
The card issuer decides this limit based on your creditworthiness and account history. You can call the customer service number on the back of your card and ask what your cash advance limit is. Some issuers allow you to request an increase, though this is not may provide.
When you take a cash advance, it counts against both your cash advance limit and your overall credit limit. If you withdraw $500 and your credit limit is $5,000, you now have $4,500 in available credit remaining.
Where you can withdraw cash from your credit card
ATM withdrawal: Insert your credit card into an ATM and enter your PIN. The machine will dispense cash up to your cash advance limit. ATMs charge their own fee on top of the card issuer's fee — typically $2 to $5 per transaction. This fee appears on your bank statement, not your credit card statement.
Bank teller: Walk into a bank branch (not necessarily your own bank) and ask for a cash advance. Bring your credit card and a photo ID. The teller will process the transaction and hand you cash. Some banks charge an additional fee for this service.
Cash advance checks: Many card issuers send checks in the mail that you can deposit or cash. These checks draw from your credit card account. When you cash or deposit the check, the amount is treated as a cash advance, subject to the same fees and interest rates. Read the fine print on the check — some have different terms than ATM withdrawals.
How a cash advance affects your credit score
Taking a cash advance does not directly hurt your credit score, but it can indirectly. A cash advance increases your credit utilization — 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. High utilization can lower your score.
More importantly, if you cannot pay back the cash advance quickly, the balance will grow due to interest and fees. A large unpaid balance hurts your score and makes it harder to borrow in the future. The card issuer may also report the account as delinquent if you miss payments.
How to pay back a cash advance
When you make a payment to your credit card, the issuer applies it in a specific order set by law. Payments go first to the balance with the highest interest rate. Since cash advances have the highest rate, your payment should go toward the cash advance first, assuming you have multiple balances on the card.
However, some card issuers apply payments differently — they may split your payment proportionally across purchases and cash advances, or they may apply it to the lowest balance first. Check your statement or call customer service to understand how your issuer handles payments.
The fastest way to eliminate a cash advance is to pay more than the minimum payment. The minimum covers interest and fees but barely touches the principal. If you owe $500 plus $20 in fees and interest, the minimum might be $25 to $30. At that rate, it takes years to pay off. Paying $100 or more per month gets you out of debt much faster and saves you hundreds in interest.
Alternatives to a cash advance
Before taking a cash advance, consider other options. A personal loan from a bank or credit union usually has a lower interest rate and no upfront fee. A balance transfer to a card with a 0 percent introductory rate can save money if you are moving debt from a high-rate card, though balance transfers also charge a fee (usually 3 to 5 percent).
If you need cash urgently, a payday loan or title loan may seem faster, but these carry even higher rates and fees than credit card cash advances. A cash advance from your employer, a loan from family or friends, or a line of credit from your bank are often better choices.
If you are in a financial emergency, contact a nonprofit credit counselor through the National Foundation for Credit Counseling (NFCC). They offer free or low-cost guidance on managing debt and finding resources.
Frequently Asked Questions
Can I take a cash advance if I have a 0 percent APR card?
The 0 percent rate applies only to purchases, not cash advances. Cash advances on a 0 percent card still charge the standard cash advance rate (usually 20 to 28 percent) and a cash advance fee. The promotional rate does not cover cash withdrawals.
What happens if I exceed my cash advance limit?
The ATM or teller will decline the transaction. You cannot withdraw more than your limit. If you need more cash, you would have to pay down the cash advance balance first, or request a limit increase from your card issuer (which is not may provide).
Does a cash advance show up differently on my credit report?
A cash advance does not appear as a separate item on your credit report. It is part of your overall credit card balance. However, if the balance goes unpaid and becomes delinquent, that delinquency is reported and can damage your credit score.
Can I use a credit card cash advance to pay another credit card?
Technically yes, but it is a bad idea. You would pay the cash advance fee and interest rate on money you are using to pay another card's balance. You end up paying more in fees and interest than if you simply paid the other card directly or transferred the balance.
Is there a way to avoid the cash advance fee?
No. The fee is charged by the card issuer and is part of the terms of your account. Some promotional offers waive the fee for new cardholders for a limited time, but these are uncommon. The only way to avoid the fee is to not take a cash advance.