Yes, you can pull money out of a credit card, but it is not the same as using it to buy something

You can withdraw cash from a credit card at an ATM or ask a bank teller for cash back, but the card issuer treats this differently than a purchase. The moment you take out cash, you start paying interest right away — there is no grace period like there is for regular purchases. You also pay an upfront fee, usually 3 to 5 percent of the amount you withdraw. If you need $200 in cash, you might pay $6 to $10 just to get it, plus interest from day one.

The reason credit card companies charge this way is that a cash withdrawal is a cash advance, not a purchase. When you buy something with a credit card, the merchant pays the card company a small fee, and you get a grace period (usually 21 to 25 days) before interest kicks in. With a cash advance, there is no merchant, no grace period, and the card company charges you immediately.

Key Takeaways

  • Cash advances charge interest from the day you withdraw the money, with no grace period like regular purchases have.
  • You pay an upfront fee (typically 3 to 5 percent) just to take out the cash, on top of the interest.
  • The interest rate on cash advances is often higher than the rate on regular purchases from the same card.
  • ATM withdrawals and bank teller cash advances both count as cash advances and trigger the same fees and rates.
  • If you need cash, a personal loan, payday loan, or borrowing from family usually costs less than a credit card cash advance.

How much a cash advance actually costs you

Let's say you withdraw $500 from your credit card at an ATM. Your card charges a 5 percent cash advance fee, so you pay $25 upfront. You now owe $525. If your cash advance rate is 25 percent APR (annual percentage rate) and you pay back the $525 in one month, you will owe about $11 in interest on top of the fee. That $500 withdrawal cost you $36 in one month alone.

The math gets worse if you carry the balance longer. If you take six months to pay back that $500, the interest alone could be $60 or more, depending on how your card calculates it. The fee stays at $25. You have now paid $85 to borrow $500 for half a year — that is an effective annual rate of around 34 percent, much higher than the stated APR.

Compare that to other options: a personal loan from a credit union might charge 12 to 18 percent APR with no upfront fee. A payday loan (which you should avoid if possible) charges more upfront but spreads the cost over two weeks. Even asking family or friends to lend you money costs nothing.

Where you can withdraw cash from a credit card

You can take a cash advance at any ATM that displays your card's logo — Visa, Mastercard, American Express, or Discover. You insert your card, enter your PIN, and withdraw cash just like you would from a debit card. The ATM will show you the fee before you confirm the transaction.

You can also walk into any bank or credit union branch and ask a teller for a cash advance. Hand them your credit card and tell them how much cash you need. They will process it the same way an ATM does, but you may have a chance to ask questions before you commit. Some banks limit how much you can withdraw in a single day or transaction.

Online, you cannot withdraw cash directly, but some cards let you transfer money from your credit card to your bank account. This is called a balance transfer to your own account or a cash transfer, and it also charges a fee and interest from day one. The fee is usually the same as an ATM withdrawal (3 to 5 percent).

Why cash advances have higher fees and rates than purchases

Credit card companies charge more for cash advances because they see them as riskier. When you buy something, the merchant and the product itself are collateral — if you do not pay, the company can dispute the charge or work with the merchant. With cash, once you have it, the company has no way to get it back. They have only your promise to repay.

Cash advances also cost the card company more to process. They have to route the money through the banking system, pay ATM operators, and handle the transaction differently than a purchase. Those costs get passed to you as a higher fee and a higher interest rate.

The interest rate difference is real and significant. If your card charges 18 percent APR on purchases, it might charge 25 or 28 percent APR on cash advances. That gap means cash advances are expensive from the moment you take them out.

How cash advances affect your credit score

A cash advance shows up on your credit report as a balance on your credit card, just like a purchase does. It counts toward your credit utilization ratio — the amount of your total credit limit that you are using. If you have a $5,000 credit limit and you take a $500 cash advance, your utilization jumps to 10 percent.

High utilization (above 30 percent) can lower your credit score, even if you pay on time. The damage is temporary — your score will recover once you pay down the balance — but it happens immediately when you take the advance.

The cash advance itself does not show up as a separate item on your credit report. It is just part of your credit card balance. But if you miss a payment on the cash advance, that missed payment will be reported and will hurt your score for years.

Cheaper ways to get cash when you need it

If you need cash and you have a credit card, consider these options first:

  • Borrow from family or friends. This costs nothing and keeps the money in your circle. Be clear about when you will repay it.
  • Take out a personal loan from a credit union or bank. Rates are usually 12 to 18 percent APR, lower than a cash advance, and you get a fixed repayment schedule.
  • Use a peer-to-peer lending platform like Prosper or LendingClub. Rates vary but are often lower than credit card cash advances.
  • Ask your employer for an advance on your paycheck. Many employers will do this with no fee or interest.
  • Sell something you own. This takes time but costs nothing and solves the problem permanently.
  • Use your debit card or bank account. If you have money in the bank, withdraw it from there instead of borrowing.

A payday loan is another option, but it is expensive and can trap you in a cycle of debt. Only consider it if you will definitely have the money to repay it in two weeks and you have no other choice.

What happens if you cannot pay back a cash advance

If you take a cash advance and do not pay it back, the interest keeps growing. Your card issuer will add late fees if you miss a payment. After 30 days late, the missed payment goes on your credit report. After 180 days (six months) of no payment, the card company may close your account and send the debt to a collection agency.

Once a debt goes to collections, it stays on your credit report for seven years, even if you eventually pay it. During those seven years, your credit score will be much lower, and you will have trouble getting loans, renting an apartment, or even getting a job in some fields.

If you are struggling to pay back a cash advance, contact your card issuer as soon as possible. Many will work with you on a payment plan or hardship program. It is better to ask for help before you miss a payment than to wait and let the debt spiral.

Frequently Asked Questions

Can I use a credit card cash advance to pay off another credit card?

Technically yes, but it is a bad idea. You would pay the cash advance fee (3 to 5 percent) plus a higher interest rate, and you would owe money on both cards. A balance transfer (moving the balance from one card to another) is cheaper if your new card offers a 0 percent introductory rate. Otherwise, a personal loan is a better choice.

Do I have to use my PIN to get a cash advance?

At an ATM, yes — you need your PIN to withdraw cash. At a bank teller, you usually do not need a PIN; your ID and signature are enough. If you have forgotten your PIN, call your card issuer to reset it or ask a teller for help.

What is the difference between a cash advance and a balance transfer?

A cash advance gives you physical cash. A balance transfer moves money from one credit card to another. Both charge fees and interest, but balance transfers sometimes offer a 0 percent introductory rate for 6 to 21 months. Cash advances never do. If you are moving debt between cards, a balance transfer is usually cheaper.

Can I get a cash advance if my credit is bad?

Yes. If your card is already open and active, you can take a cash advance regardless of your credit score. The card issuer has already decided to trust you with credit; a cash advance is just another way to use that credit. However, you may have a lower cash advance limit than your overall credit limit.

Will paying back a cash advance quickly help my credit score?

Paying it back quickly will stop the interest from growing and prevent late payments, which protects your score. But the cash advance itself will lower your score temporarily because it raises your credit utilization. Once you pay it off, your utilization drops and your score will recover over a few months.