You can withdraw cash from a credit card, but it works differently than a debit card and costs you money upfront
A cash advance is a withdrawal of actual cash from your credit card account. Unlike a debit card, which pulls from money you already have, a cash advance borrows against your credit limit the same way a purchase does. The difference is that the card issuer charges you fees and interest immediately — not at the end of the month like a regular purchase.
Most credit cards allow cash advances, but the terms are deliberately unfavorable. You pay a fee (usually 3 to 5 percent of the amount withdrawn), and the interest rate on that cash is often higher than your regular purchase rate. Interest starts accruing the day you withdraw the money, with no grace period. If you need cash urgently, a cash advance is possible but expensive.
Key Takeaways
- Cash advances charge an upfront fee (typically 3 to 5 percent) plus a higher interest rate than purchases, with interest starting immediately.
- You can withdraw cash at an ATM using your credit card PIN, or at a bank teller window, but both routes charge the same fees.
- The interest on a cash advance does not have a grace period, so you pay interest every single day until the balance is paid off.
- A cash advance counts against your credit limit and appears on your credit report as a separate balance, which can lower your credit score.
- Alternatives like a personal loan, payday loan, or borrowing from family are often cheaper than a credit card cash advance.
How to withdraw cash and what it costs you
You can get a cash advance in two ways. The first is to visit an ATM with your credit card and PIN, just as you would with a debit card. The second is to walk into a bank branch (yours or any bank) and ask the teller for a cash advance. Both methods charge the same fees.
The cost breaks down into two parts. First, there is an upfront fee, usually shown as a percentage of the amount withdrawn. Most cards charge between 3 and 5 percent, though some charge a flat fee (like $10) if that is higher. Second, there is the interest rate, which is almost always higher than your purchase rate — sometimes 5 to 10 percentage points higher. This interest starts the day you withdraw the money, not at the end of the billing cycle.
Example: You withdraw $500 from a card with a 4 percent cash advance fee and a 25 percent APR. You pay $20 upfront. If you pay back the $520 in 30 days, you also owe about $10 in interest. Your total cost is roughly $30 for borrowing $500 for a month.
Why cash advances hurt your credit score
A cash advance affects your credit in two ways. First, it counts against your available credit. If your limit is $5,000 and you withdraw $1,000 in cash, your available credit drops to $4,000. This raises your credit utilization ratio — the percentage of your limit you are using — which is a major factor in your credit score.
Second, the cash advance appears separately on your credit report. Credit bureaus can see that you took a cash advance rather than making a regular purchase. While this does not automatically hurt your score, it signals to lenders that you may be short on cash, which some scoring models penalize.
The damage is temporary if you pay off the cash advance quickly. But if you carry the balance, the high interest rate means the debt grows faster than a regular purchase would, making it harder to pay down.
When a cash advance makes sense
A cash advance is rarely the cheapest option, but there are situations where it is the fastest one available. If you need cash for an emergency and have no other way to get it in the next few hours, a cash advance from an ATM is immediate. You do not have to wait for approval or funding like you would with a personal loan.
A cash advance also makes sense if you can pay it back within days rather than weeks. The fee is fixed, so the shorter you hold the balance, the less interest you pay. If you know you will have money in three days and need cash today, the total cost might be acceptable.
In almost every other situation — if you need the money for more than a few days, or if you have time to explore other options — something else will be cheaper. A personal loan from a bank or credit union, a payday loan (despite its bad reputation, sometimes cheaper than a cash advance), or borrowing from family or friends all have lower total costs over time.
How to minimize the damage if you do take a cash advance
If you decide a cash advance is necessary, take these steps to keep the cost as low as possible. First, withdraw only what you need. Every dollar you do not withdraw saves you the fee and interest on that dollar. Second, pay it back as fast as you can. Every day you carry the balance, interest accrues. If you can pay it back within a week, do so.
Third, make sure you understand your card's terms before you withdraw. Call the card issuer or check your online account to confirm the cash advance fee and interest rate. Some cards offer different rates for different types of transactions, and you want to know exactly what you are paying.
Fourth, do not use a cash advance to pay off other debt unless that debt has a much higher interest rate. Moving a balance from one card to another via cash advance is almost always more expensive than a balance transfer, which usually has a lower fee and sometimes a promotional rate.
Alternatives that usually cost less
Before you withdraw cash from your credit card, consider these cheaper options. A personal loan from a bank, credit union, or online lender typically has a lower interest rate than a cash advance and no upfront fee. You may need to wait a few days for funding, but the total cost is usually much lower.
A balance transfer to a new card with a 0 percent introductory rate can be useful if you are moving debt from another card, though it does not help you get cash. A payday loan is expensive but sometimes cheaper than a cash advance if you can repay it within two weeks. Borrowing from family or friends, if that is an option, costs nothing.
If you have a savings account, even a small one, using that money and replenishing it later is always cheaper than borrowing. If you have a 401(k) or similar retirement account, some plans allow loans against your balance at a low interest rate — check with your plan administrator.
What happens if you cannot pay back the cash advance
If you carry a cash advance balance, the high interest rate means it grows quickly. Unlike a purchase, there is no grace period, so interest starts the moment you withdraw the money. If you miss a payment, you also face late fees and a possible increase in your interest rate.
A cash advance that becomes a long-term balance can damage your credit score significantly. It raises your utilization ratio, signals financial stress to lenders, and the missed payments (if they happen) stay on your credit report for seven years. If you are struggling to pay back a cash advance, contact your card issuer to discuss a payment plan or hardship program before you miss a payment.
Frequently Asked Questions
Can I use a credit card to withdraw cash at any ATM?
Yes, you can use your credit card at most ATMs that display your card's logo. However, some ATMs charge an additional fee on top of your card issuer's cash advance fee — sometimes $2 to $5 per withdrawal. Bank ATMs (especially your own bank) usually have lower or no ATM fees, so use those when possible.
Is there a limit to how much cash I can withdraw?
Yes. Your card issuer sets a cash advance limit, which is often lower than your total credit limit. You might have a $5,000 credit limit but only a $1,500 cash advance limit. Check your account online or call the issuer to find out your limit before you try to withdraw.
Do I have to pay back a cash advance right away?
No, but you should. Interest starts immediately and accrues daily, so the longer you carry the balance, the more you pay. There is no grace period like there is for purchases. If you can pay it back within a few days, the total cost stays manageable.
Will a cash advance hurt my credit score?
Yes, it can. A cash advance raises your credit utilization ratio and signals financial stress, both of which can lower your score. The damage is usually temporary if you pay it back quickly, but if you carry the balance, the high interest rate makes it harder to pay down, keeping your score depressed longer.
What is the difference between a cash advance and a balance transfer?
A balance transfer moves debt from one card to another (usually with a lower fee and sometimes a 0 percent introductory rate). A cash advance gives you actual cash, not a credit transfer. Balance transfers are cheaper if you are moving existing debt; cash advances are for getting cash in hand.