You can take money off a credit card, but it is not the same as using the card to buy something

Taking money off a credit card is called a cash advance. When you do this, you are borrowing cash directly from your credit card issuer instead of using the card to pay a merchant. The money goes into your bank account or you receive it as physical cash, and you owe it back to the card company just like a purchase — except the terms are worse.

Cash advances cost more than regular purchases because they carry a separate, higher interest rate, an upfront fee, and they start accruing interest immediately. There is no grace period like there is for purchases. If you are considering a cash advance, you need to understand the full cost before you proceed, because the debt grows faster than you might expect.

Key Takeaways

  • Cash advances charge a fee (usually 3 to 5 percent of the amount) plus a higher interest rate than purchases, and interest starts accruing the day you take the money.
  • You can obtain a cash advance at an ATM using your PIN, at a bank teller window, or through a balance transfer check if your card issuer sends one.
  • There is no grace period for cash advances, so interest begins accumulating immediately even if you pay the full balance when your statement arrives.
  • Your credit card statement will show the cash advance separately from purchases, with its own balance, interest rate, and minimum payment calculation.
  • Most card issuers set a cash advance limit that is lower than your total credit limit, and this limit is separate from your purchase limit.

How the cash advance fee and interest rate work

When you take a cash advance, your card issuer charges you a cash advance fee upfront. This fee is typically 3 to 5 percent of the amount you withdraw, though some cards charge a flat dollar amount instead (for example, $10 minimum). The fee is added to your balance immediately, so if you withdraw $500 with a 5 percent fee, you owe $525 right away.

The cash advance interest rate is separate from your purchase interest rate and is almost always higher. Where a purchase might carry 18 percent APR, a cash advance on the same card might carry 24 or 28 percent APR. This rate varies by card issuer and by your creditworthiness, so check your card's terms or call the issuer to find out your specific rate before you take the advance.

Interest on a cash advance begins accruing the day you take the money. Unlike purchases, which have a grace period (usually 21 to 25 days) before interest starts, cash advances have no grace period. If you take out $500 on the 1st of the month and pay it back on the 15th, you still owe interest for all 15 days.

Where and how to take a cash advance

You have three main ways to obtain a cash advance from your credit card. The first is to use an ATM with your credit card and PIN. Most ATMs accept credit cards for cash advances, though some do not. The ATM will show you the fee (usually $2 to $5 per transaction in addition to the card's cash advance fee) and ask you to confirm before dispensing cash.

The second way is to visit a bank teller in person. You can go to your card issuer's branch (if it is a bank-issued card) or to any bank that accepts credit cards for cash advances. The teller will process the transaction and give you cash. This method does not charge an ATM operator fee, but the card's cash advance fee still applies.

The third way is through a balance transfer check. Some card issuers send checks that you can write against your credit line. These checks work like cash advances — they carry the same fee and interest rate — but they are treated as checks rather than ATM withdrawals. You write the check to yourself or to a payee, deposit it, and the funds appear in your bank account.

Cash advance limits and how they affect your credit

Your card issuer sets a cash advance limit that is separate from your purchase limit. If your total credit limit is $5,000, your cash advance limit might be $1,500 or $2,000. This limit is set by the issuer based on your credit profile and account history, and you can call to ask what yours is. The limit may be lower than your purchase limit because cash advances are riskier for the issuer.

Taking a cash advance affects your credit utilization ratio, which is part of your credit score. If you have a $5,000 limit and take a $1,000 cash advance, your utilization goes up by 20 percent. This can lower your credit score slightly, especially if you already carry other balances. The effect is temporary — your score will recover as you pay down the advance — but it happens immediately.

A cash advance also appears on your credit report as a cash advance, not as a regular purchase. This does not damage your score more than a purchase would, but it is visible to lenders and may signal that you needed emergency cash, which some lenders view as a risk factor.

How cash advances appear on your statement and how to pay them

Your credit card statement will show the cash advance as a separate line item from your purchases. It will display the amount withdrawn, the fee charged, the current interest rate, and the balance owed. If you have both purchases and a cash advance on the same card, they will have separate balances and may have different interest rates.

When you make a payment to your card, the issuer applies it according to a specific order set by federal law. Payments are applied first to the balance with the highest interest rate. Since cash advances usually carry the highest rate, your payment will go toward the cash advance first, then to purchases. This means if you have a $1,000 purchase at 18 percent and a $500 cash advance at 25 percent, and you pay $300, the full $300 goes to the cash advance.

To avoid interest on a cash advance, you must pay the full amount before the due date shown on your statement. Because interest starts accruing immediately, even a small balance left unpaid will generate interest charges. If you pay $400 of a $500 cash advance, the remaining $100 will accrue interest at your cash advance rate until it is paid off.

Alternatives to cash advances and when to consider them

Before taking a cash advance, consider whether another option might cost less. A personal loan from a bank or credit union often has a lower interest rate than a cash advance, even if you have fair credit. The loan has an origination fee (typically 1 to 6 percent) and a fixed repayment term, but the total cost over time is often lower than a cash advance's combination of high interest and immediate accrual.

A payday loan is another option, though it is usually more expensive than a cash advance. Payday loans charge very high fees and interest rates, often equivalent to 400 percent APR or higher. They are short-term (usually two weeks) and can trap you in a cycle of borrowing. A cash advance is generally cheaper than a payday loan unless you can pay it back within a few days.

If you have access to a 0 percent APR balance transfer card, you could transfer a balance from another card to that card instead of taking a cash advance. Balance transfers do charge a fee (usually 3 to 5 percent), but if the new card offers 0 percent APR for 6 to 21 months, you can pay off the balance interest-free during that period. This works only if you are transferring an existing balance, not obtaining new cash.

If you need cash for an emergency and have no other options, a cash advance is faster than a personal loan application. But if you have time, exploring a personal loan or asking a friend or family member for a short-term loan will almost always cost you less.

What happens if you cannot pay back a cash advance

If you do not pay a cash advance, the balance remains on your card and interest continues to accrue. After 30 days of non-payment, the issuer will report the account as late to the credit bureaus, which damages your credit score. After 60 days, the damage is worse. After 180 days (six months), the issuer may charge off the account, meaning they write it off as a loss and may sell the debt to a collection agency.

Once an account is charged off, a collection agency may contact you to recover the debt. You are still legally responsible for the full amount owed, including all interest and fees. The collection agency can sue you in court to obtain a judgment, which allows them to garnish your wages or place a lien on your property, depending on your state's laws.

If you are struggling to pay a cash advance, contact your card issuer as soon as possible. Some issuers offer hardship programs that lower your interest rate or allow you to pause payments temporarily. These programs do not erase the debt, but they can make it more manageable while you work toward paying it off.

Frequently Asked Questions

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

Technically yes, but it is a bad idea. You would be taking a cash advance (with its fee and high interest rate), depositing it in your bank account, and using it to pay another card's purchase balance. You are paying the cash advance fee plus interest on top of the original purchase, which costs far more than paying the purchase directly. A balance transfer is a better option if you want to move a balance between cards.

Does a cash advance show up differently on my credit report than a purchase?

It shows up as a cash advance on your credit report, but it affects your credit score the same way a purchase does — through your utilization ratio and payment history. The fact that it is a cash advance is visible to lenders, but it does not automatically lower your score more than a purchase would. Late or missed payments on a cash advance damage your score the same way they would on any other balance.

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

A cash advance gives you new cash borrowed against your credit line, while a balance transfer moves an existing balance from one card to another. Cash advances charge a fee and start accruing interest immediately. Balance transfers also charge a fee but may offer a 0 percent APR period. Use a cash advance when you need new cash; use a balance transfer when you want to move existing debt to a lower-rate card.

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

Yes. Your cash advance limit is based on your credit line, not on a separate approval process. If you have a credit card account open, you can take a cash advance up to your limit regardless of your credit score. However, your cash advance limit may be lower than your purchase limit, and your interest rate will be based on your creditworthiness.

How long does it take to get a cash advance?

An ATM cash advance is instant — you get the cash immediately. A bank teller cash advance takes a few minutes. A balance transfer check takes as long as it takes to mail the check and for your bank to process it, usually three to five business days. The fee and interest start accruing as soon as the transaction is processed, not when you receive the cash.