A cash advance lets you borrow money against your credit card's available balance, but it costs more than a regular purchase
A cash advance is when you use your credit card to withdraw cash from an ATM, bank teller, or convenience store. The money comes from your credit limit, just like a purchase does. But unlike a purchase, a cash advance starts charging interest immediately — there is no grace period — and the interest rate is usually higher than your card's regular purchase rate.
You should only use a cash advance if you genuinely need cash and have no other option. The fees and interest add up fast. If you are considering one, understand the full cost before you proceed.
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- You will pay an upfront fee — usually 3 to 5 percent of the amount withdrawn — on top of interest charges.
- You can get a cash advance at an ATM using your PIN, at a bank teller with your card and ID, or at some convenience stores.
- The money counts toward your credit utilization ratio immediately, which can lower your credit score even before you pay interest.
Where you can withdraw cash from your credit card
Most credit cards work at ATMs that display your card's logo — Visa, Mastercard, American Express, or Discover. You insert your card, enter your PIN, and withdraw up to your cash advance limit (which is usually lower than your total credit limit). This is the fastest and most common method.
You can also visit a bank branch and ask a teller for a cash advance. Bring your card and a photo ID. Some banks charge an extra fee for this service on top of the cash advance fee your card issuer charges.
A few convenience stores and check-cashing businesses offer cash advances, but they typically charge additional fees beyond what your card issuer charges. Avoid these unless you have no other option.
The fees and interest you will pay
Your card issuer charges two separate costs for a cash advance. First, there is an upfront fee, usually 3 to 5 percent of the amount you withdraw. If you take out $500, expect to pay $15 to $25 just to get the cash. This fee is added to your balance immediately.
Second, interest starts accruing the moment you withdraw the cash. There is no grace period like you get with purchases. If your purchase APR is 18 percent, your cash advance APR might be 23 or 24 percent. The interest compounds daily, so the longer you carry the balance, the more you owe.
To see your card's specific cash advance fee and APR, check your card's terms and conditions or log into your account online. These rates vary by card and by issuer.
How a cash advance affects your credit score
The moment you take a cash advance, it counts toward your credit utilization ratio — the percentage of your available credit you are using. If you have a $5,000 limit and take a $500 cash advance, your utilization jumps to 10 percent. High utilization signals risk to credit scoring models, and your score can drop even before you pay a cent in interest.
The impact is temporary if you pay off the cash advance quickly. But if you carry the balance for months, the utilization stays high and keeps dragging your score down. This is one reason cash advances are expensive beyond just the fees and interest — they can cost you points on your credit report.
How to pay off a cash advance
When you make a payment to your credit card, the money goes toward your balance in a specific order set by law. Payments cover the lowest-interest debt first, which means they go to purchases before they go to your cash advance. This is why cash advances are so costly — you can pay your full statement balance and still owe interest on the cash advance.
To pay off a cash advance quickly, make a separate payment specifically labeled for the cash advance, or call your card issuer and ask how to direct a payment to that portion of your balance. Some cards let you do this online; others require a phone call.
The faster you pay it off, the less interest you owe. If you took out $500 at a 24 percent APR, carrying it for three months costs roughly $30 in interest on top of the $15 to $25 upfront fee. Carrying it for a year costs roughly $120 in interest.
Alternatives to a credit card cash advance
Before you take a cash advance, consider whether any of these options would cost you less. A personal loan from a bank or credit union often has a lower interest rate and no upfront fee. A payday loan is predatory and usually more expensive than a cash advance, so avoid it. A balance transfer to a 0 percent APR card (if you have one) moves the debt but does not give you cash.
If you need cash for an emergency, ask whether you can use a debit card, borrow from a friend or family member, or negotiate a payment plan with whoever you owe money to. These options cost nothing or far less than a cash advance.
If you genuinely have no alternative and must take a cash advance, withdraw only what you need and commit to paying it off within one or two months.
What happens if you cannot pay back a cash advance
If you do not pay your cash advance, it stays on your credit card balance and continues to accrue interest. Your minimum payment will increase. If you miss payments, your card issuer will report the late payment to credit bureaus, and your credit score will drop. After 30 days late, you may face penalty interest rates — even higher rates applied to your entire balance.
If the debt goes unpaid for six months or longer, your card issuer may close your account and send the debt to a collection agency. At that point, you may face calls from collectors and potential legal action. The debt can stay on your credit report for seven years.
If you are struggling to pay, contact your card issuer before you miss a payment. Some issuers offer hardship programs that lower your interest rate or pause interest temporarily. It is worth asking.
Frequently Asked Questions
Can I take a cash advance if my credit card is maxed out?
No. A cash advance draws from your available credit, not from a separate pool of money. If your limit is $5,000 and you have already charged $5,000, you have no available credit left and cannot take a cash advance. You would need to pay down your balance first.
Is there a limit to how much I can withdraw as a cash advance?
Yes. Your card issuer sets a cash advance limit, which is usually lower than your total credit limit — often 20 to 50 percent of it. Check your card's terms or call the issuer to find out your specific limit. You cannot withdraw more than this amount, even if you have available credit remaining.
Do I have to use my PIN to get a cash advance?
At an ATM, yes — you need your PIN. At a bank teller, no — you show your card and ID instead. If you do not have a PIN set up, contact your card issuer to create one before you go to an ATM.
Will a cash advance show up on my credit report?
The cash advance itself does not appear as a separate line item on your credit report. But it increases your credit utilization ratio, which affects your credit score. If you miss payments on the cash advance, the missed payment will show on your report.
Can I take a cash advance from a credit card I just opened?
Usually yes, but some new cards have restrictions. Check your card's terms or call the issuer. Even if you can take a cash advance right away, the fees and interest make it an expensive choice, so avoid it if possible.