You can take cash out of a credit card, but it is not the same as using the card to buy something
A cash advance is a withdrawal of actual money from your credit card account. You go to an ATM, a bank teller, or a convenience store and pull out cash using your card, just as you would with a debit card. The money is yours to spend however you want. But the card issuer charges you fees and interest that start immediately — often higher than the interest on regular purchases — and the cash does not get the same protections that credit card purchases do.
The mechanics are straightforward: you initiate the withdrawal, the issuer deducts it from your available credit, and you owe it back with interest and fees. What makes it different from a purchase is that there is no grace period. Interest on a cash advance begins accruing the day you take it out, not at the end of your billing cycle.
Key Takeaways
- Cash advances charge a fee (usually 3 to 5 percent of the amount withdrawn) plus a higher interest rate than purchases, with interest starting immediately.
- You can withdraw cash at ATMs, bank tellers, or some convenience stores using your credit card PIN, up to a limit set by your issuer.
- The interest on a cash advance does not have a grace period, so charges begin the day you withdraw the money.
- Cash advances do not count as purchases and are not protected by credit card dispute rights if something goes wrong.
Where and how to take a cash advance
Most credit cards allow you to withdraw cash at any ATM that displays your card network's logo — Visa, Mastercard, American Express, or Discover. You insert your card, enter your PIN (which you may need to set up first if you have never used it), and select the amount. The ATM dispenses the cash and deducts it from your available credit immediately.
You can also visit a bank branch — your card issuer's branch or any bank that accepts your card — and ask a teller for a cash advance. Some convenience stores and check-cashing services offer cash advances as well, though they may charge an additional fee on top of what your card issuer charges. Each withdrawal counts as a separate transaction and may trigger a separate fee.
Your card issuer sets a cash advance limit, which is often lower than your overall credit limit. For example, you might have a $5,000 credit limit but only a $1,000 cash advance limit. Check your card agreement or call the issuer to find out what your limit is before you try to withdraw.
Fees and interest rates on cash advances
Every cash advance comes with at least two costs. The cash advance fee is charged upfront and is usually a percentage of the amount you withdraw — typically 3 to 5 percent, though some cards charge a flat fee (like $10) if that is higher. A $500 cash advance with a 4 percent fee costs you $20 right away.
The cash advance interest rate is separate from your purchase interest rate and is almost always higher. While a purchase might carry an APR of 18 percent, a cash advance on the same card might be 25 percent or more. This rate applies to the full amount you withdrew, and interest accrues daily from the moment you take the cash.
Unlike a purchase, there is no grace period. If you take a cash advance on the first day of your billing cycle, interest starts accruing that same day. By the time your statement arrives, you already owe interest charges. If you carry the balance, those charges compound.
How a cash advance affects your credit and account
A cash advance counts against your available credit just like a purchase does. If you have a $5,000 limit and take a $1,000 cash advance, you have $4,000 left to spend. The withdrawal shows up on your credit card statement and is reported to the credit bureaus as part of your credit utilization — the percentage of your available credit you are using. High utilization can lower your credit score.
When you make a payment to your card, the issuer applies it to your balance in a specific order set by law. Payments go first to the highest-interest debt, which is usually the cash advance. This means if you have both a purchase balance and a cash advance balance, your payment reduces the cash advance first, leaving the purchase balance to accrue interest longer.
Cash advances do not carry the same fraud and dispute protections as purchases. If you use your card to buy something and the merchant never sends it or it arrives damaged, you can dispute the charge with your card issuer and often get your money back. A cash advance is treated as money you withdrew — once it is in your hands, the issuer considers the transaction complete.
When a cash advance makes sense and when it does not
A cash advance is expensive and should be a last resort. The combination of an upfront fee and a high interest rate means you are paying significantly more than if you used the card to make a purchase or borrowed money another way. If you need cash for an emergency and have no other option, a cash advance is faster than a personal loan, but it costs more.
A cash advance makes less sense if you have other options available. A personal loan from a bank or credit union, a payday loan (despite its own high costs), or borrowing from family are often cheaper. Even a balance transfer to a card with a 0 percent introductory rate is better than a cash advance, because you avoid the upfront fee and the high interest rate.
Some people take cash advances to pay off other debts, hoping to consolidate. This usually backfires because the cash advance fee and interest rate are so high that you end up paying more overall. If you are considering this, talk to a credit counselor first — many nonprofits offer free consultations.
How to pay back a cash advance quickly
The fastest way to stop paying interest on a cash advance is to pay it off in full as soon as possible. Every day the balance sits, interest accrues. If you took a $500 cash advance at 25 percent APR, you are paying roughly $3.42 per day in interest alone, not counting the upfront fee you already paid.
Make a payment larger than your minimum as soon as you can. The minimum payment covers only a small portion of the principal and most of the interest, so it takes a long time to pay off. If you can pay the full amount within a few days or weeks, do that. If you cannot, pay as much as you can afford and then stop using the card until the balance is gone.
Some card issuers allow you to set up automatic payments. This ensures you do not miss a payment and rack up late fees on top of the cash advance costs. Check your account online or call the issuer to see if this option is available.
Alternatives to a cash advance
If you need cash urgently, consider these options before taking a cash advance. A personal loan from a bank or credit union usually has a lower interest rate and no upfront fee. The application takes longer, but if you have time, it is cheaper. A line of credit works similarly and may be available if you have an existing relationship with a bank.
A balance transfer to a different credit card can help if you are trying to move debt. Some cards offer 0 percent introductory rates on balance transfers for 6 to 21 months, though they charge an upfront fee (usually 3 to 5 percent). This is still cheaper than a cash advance if you can pay off the balance during the introductory period.
If you have a 401(k) or similar retirement account, you may be able to borrow against it. The interest rate is lower than a credit card, and you pay the interest back to your own account. However, if you leave your job, the loan becomes due quickly, and if you cannot repay it, it counts as a withdrawal with tax penalties. Talk to your plan administrator before doing this.
Frequently Asked Questions
What is the difference between a cash advance and a regular credit card purchase?
A purchase is a transaction with a merchant that appears on your statement. A cash advance is money you withdraw directly. Purchases have a grace period before interest starts; cash advances do not. Purchases are protected by dispute rights; cash advances are not. Cash advances also charge a higher interest rate and an upfront fee.
Can I use a credit card at an ATM without a PIN?
No. You need a PIN to withdraw cash at an ATM. If you have never set one up, contact your card issuer to request one. Some issuers allow you to set it online; others require a phone call. Once you have a PIN, you can use it at any ATM that accepts your card network.
Does a cash advance hurt my credit score?
Yes, but indirectly. A cash advance increases your credit utilization — the percentage of your available credit you are using — which can lower your score. It also shows up on your credit report as a balance owed. The impact depends on how much you withdraw and how quickly you pay it back.
What happens if I cannot pay back a cash advance?
If you miss a payment, you will be charged a late fee and your interest rate may increase. The balance will continue to accrue interest daily. If you fall behind, the issuer may report the account as delinquent to the credit bureaus, which damages your credit. Contact your issuer immediately if you are struggling to pay — some offer hardship programs or payment plans.
Can I take a cash advance on a rewards credit card?
Yes, but you do not earn rewards on a cash advance. Rewards are earned only on purchases. You pay the cash advance fee and interest rate instead, making it an even more expensive option than on a non-rewards card.