You can withdraw cash from a credit card, but it is not the same as using a debit card
A cash advance is a withdrawal of money from your credit card account at an ATM, bank teller, or through a convenience check. The money comes from your credit limit, not from a separate account. Unlike a purchase, a cash advance starts charging interest immediately — there is no grace period — and the interest rate is usually higher than your purchase rate.
Most credit cards allow cash advances, but the amount you can withdraw is limited to a percentage of your credit limit, often 20 to 50 percent. A card with a $5,000 limit might let you withdraw $1,000 to $2,500 in cash. You find out your specific cash advance limit by calling the card issuer or checking your online account.
Key Takeaways
- Cash advances charge interest from day one with no grace period, and the interest rate is typically 3 to 5 percentage points higher than your purchase rate.
- You pay an upfront fee of 3 to 5 percent of the amount withdrawn, plus the ongoing interest, making cash advances one of the most expensive ways to borrow.
- Your cash advance limit is separate from your credit limit and is usually 20 to 50 percent of what you can charge for purchases.
- Withdrawals at your card issuer's own ATMs or bank branches are cheaper than third-party ATMs, which may charge additional fees on top of the card issuer's fee.
The fees and interest you pay on a cash advance
When you take a cash advance, you pay two costs immediately: a cash advance fee and interest. The fee is charged upfront and ranges from 3 to 5 percent of the amount you withdraw. On a $500 withdrawal, that is $15 to $25 just to get the cash.
Interest starts accruing the same day. The cash advance interest rate is typically 3 to 5 percentage points higher than your purchase APR. If your card charges 18 percent on purchases, the cash advance rate might be 21 or 23 percent. That interest compounds daily and is added to your balance each month until you pay it off.
If you use an ATM that is not owned by your card issuer, you may also pay an ATM operator fee — often $2 to $3 — on top of the card issuer's fee. Using your issuer's own ATMs or visiting a branch of their bank avoids this extra charge.
Where you can withdraw cash from a credit card
You can get a cash advance at any ATM that displays your card's logo — Visa, Mastercard, American Express, or Discover. You insert the card, select "cash advance" or "withdrawal," enter your PIN, and choose the amount. The ATM dispenses the cash and charges your credit card account.
You can also visit a bank branch where your card issuer operates and ask a teller for a cash advance. This is often free of the ATM operator fee, though the card issuer's cash advance fee still applies. Some card issuers also send convenience checks with your account — you write a check against your credit line, deposit it, and the funds go into your bank account. These also trigger the cash advance fee and interest rate.
How a cash advance affects your credit score
A cash advance does not directly hurt your credit score the way a missed payment does, but it can harm your score indirectly. The withdrawal increases your credit utilization — the percentage of your available credit you are using. If you have a $5,000 limit and take a $1,000 cash advance, your utilization jumps to 20 percent. High utilization signals risk to credit scoring models and can lower your score by 10 to 50 points, depending on how much you borrow.
The effect is temporary. Once you pay down the cash advance, your utilization drops and your score recovers. However, if you carry the balance and pay interest for months, the ongoing high utilization keeps your score depressed for that entire period.
When a cash advance makes sense and when it does not
A cash advance is expensive and should be a last resort. It makes sense only in genuine emergencies where you need cash immediately and have no other option — a car repair that requires a deposit, a medical bill that must be paid in person, or a situation where your debit card is not accepted.
A cash advance does not make sense for everyday spending, bill payments, or situations where you could wait a day or two. Transferring money from savings, using a debit card, or asking for a short-term loan from a friend or family member is almost always cheaper. Even a personal loan from a bank or credit union, which has a lower interest rate than a cash advance, is a better choice if you need to borrow money.
If you are considering a cash advance because you do not have enough money to cover an expense, that is a sign to pause and reassess your budget or look for other sources of funds before borrowing at a high rate.
How to minimize the cost if you must 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 borrow costs you 3 to 5 percent upfront plus daily interest. Second, use an ATM or branch owned by your card issuer to avoid the extra ATM operator fee. Third, pay back the cash advance as fast as you can. Interest compounds daily, so even a few extra days of carrying the balance adds up.
Some card issuers allow you to pay a cash advance separately from your regular balance, which can help you track how much you owe and prioritize paying it off. Check your account online or call the issuer to see if this option is available. Paying off the cash advance before you make new purchases also ensures that your payments go toward the highest-interest debt first.
Alternatives to a cash advance
Before you take a cash advance, explore other options. If you need cash for an emergency, check whether you can use a debit card instead — most places that take cards accept debit. If you need to borrow money, a personal loan from a bank, credit union, or online lender typically charges 6 to 36 percent APR, which is lower than a cash advance rate. A credit card balance transfer to a 0 percent introductory rate card is another option if you have time to open a new account.
If you are short on cash because of a temporary income gap, a short-term loan from a friend or family member, a payment plan with a creditor, or a hardship program through your bank may be available. Many utilities and medical providers offer payment plans that do not charge interest if you ask.
Frequently Asked Questions
What is the difference between a cash advance and a regular purchase on a credit card?
A purchase uses your credit limit and has a grace period — you do not pay interest if you pay the full balance by the due date. A cash advance charges interest from day one with no grace period, costs 3 to 5 percent upfront, and has a higher interest rate. The cash advance rate is typically 3 to 5 percentage points above your purchase rate.
Can I use a credit card to withdraw money at any ATM?
You can use any ATM that displays your card's logo — Visa, Mastercard, American Express, or Discover. However, ATMs not owned by your card issuer may charge an additional operator fee of $2 to $3 on top of your card issuer's cash advance fee. Using your issuer's own ATMs is cheaper.
Does a cash advance show up on my credit report?
The cash advance itself does not appear separately on your credit report, but the balance does. If you carry the balance and make on-time payments, it shows as an account in good standing. If you miss a payment, that missed payment is reported and damages your credit score.
How long does it take to pay off a cash advance?
That depends on how much you owe and how much you pay each month. If you owe $500 at 23 percent APR and pay $100 per month, it takes about 5 to 6 months and costs roughly $60 in interest. The longer you carry the balance, the more interest you pay, so paying it off as quickly as possible is important.
What happens if I cannot pay back a cash advance?
If you miss a payment, your card issuer reports it to the credit bureaus, your credit score drops, and you may face late fees and a higher interest rate. If the debt goes unpaid for 180 days, the issuer may charge off the account and sell the debt to a collection agency. At that point, a collector may contact you to recover the money.