What getting cash off a credit card actually means

Getting cash off a credit card means withdrawing money from an ATM or asking a bank teller for cash, using your credit card instead of a debit card. The money comes from your credit limit, not from a bank account you own. You are borrowing from the credit card company, and you will owe them back with interest.

This is different from using a debit card at an ATM, where the money comes from your own account. With a credit card cash withdrawal — called a cash advance — the credit card company charges you fees and interest rates that are usually much higher than the rate they charge for regular purchases. Most people should avoid this unless they have no other option.

Key Takeaways

  • A cash advance on a credit card charges a fee (usually 3 to 5 percent of the amount) plus a higher interest rate than regular purchases, often 20 to 30 percent or more.
  • Interest on a cash advance starts accruing immediately — there is no grace period like there is for purchases — so the cost grows every single day.
  • You can get a cash advance at an ATM, a bank teller, or sometimes through a convenience check mailed by your card issuer.
  • The cash advance limit is often lower than your total credit limit, and using it counts against your available credit just like a purchase does.
  • Alternatives like a personal loan, borrowing from family, or using a debit card are almost always cheaper than a cash advance.

Where the money actually comes from and what it costs

When you take a cash advance, you are borrowing directly from your credit card company's cash reserves, not from a merchant or store. The company charges you two separate costs: a cash advance fee and a higher interest rate.

The cash advance fee is a one-time charge, usually between 3 and 5 percent of the amount you withdraw. On a $500 withdrawal, that is $15 to $25 right away. Some cards charge a flat fee instead (like $10 per withdrawal), which is better if you are taking out a large amount but worse if you are taking out a small amount.

The interest rate on a cash advance is separate from your regular purchase APR and is almost always higher — often 20 to 30 percent or more, depending on your card and creditworthiness. Unlike purchases, which usually have a grace period of 21 to 25 days before interest starts, interest on a cash advance begins accruing the day you withdraw it. This means the cost grows every single day until you pay it back.

On a $500 cash advance at 25 percent APR, you are paying roughly $3.42 per day in interest alone, before you even count the upfront fee.

How to physically get the cash

There are three main ways to take a cash advance from a credit card.

ATM withdrawal: Insert your credit card into an ATM that accepts it (not all do), enter your PIN, and select "cash advance" or "withdrawal." The ATM will show you the fee before you confirm. This is the fastest method and works 24/7, but ATMs often charge their own fee on top of your card's fee — sometimes $2 to $5 per transaction.

Bank teller: Walk into a bank branch (yours or any bank) and ask the teller for a cash advance on your credit card. Bring your card and ID. The teller will process it like a transaction and hand you cash. This usually has no additional ATM fee, but you are limited to branch hours and may have to wait in line.

Convenience checks: Some credit card companies mail you blank checks that draw from your credit line. You write one like a regular check and deposit it into your bank account or cash it. These are convenient if you need to pay a bill, but they still carry the same cash advance fees and interest rates. Read the fine print on any checks your card issuer sends — they may be treated as purchases instead of cash advances, which would be cheaper.

Your cash advance limit versus your credit limit

Your credit card company sets a separate cash advance limit, which is usually lower than your total credit limit. If your credit limit is $5,000, your cash advance limit might be $1,500 or $2,000. You cannot withdraw more than this limit, even if you have available credit for purchases.

When you take a cash advance, it counts against both your cash advance limit and your overall available credit. If you withdraw $500 and your cash advance limit is $1,500, you can only withdraw $1,000 more. If your total credit limit is $5,000 and you have already charged $3,000 in purchases, a $500 cash advance brings your total debt to $3,500, leaving only $1,500 in available credit for new purchases.

You can ask your card issuer to increase your cash advance limit, but they rarely do, and asking does not hurt your credit. Most people should not bother — if you need a higher cash advance limit, you probably should not be taking a cash advance at all.

Why cash advances damage your credit score

A cash advance hurts your credit in two ways, both immediate.

First, it raises your credit utilization ratio — the percentage of your available credit that you are using. If you have a $5,000 limit and charge $1,000 in purchases, your utilization is 20 percent. If you then take a $500 cash advance, your utilization jumps to 30 percent. Credit scoring models treat higher utilization as riskier, and your score drops. This effect is temporary — your score recovers as you pay down the balance — but it happens immediately.

Second, if you cannot pay off the cash advance quickly, the interest charges and fees make the balance grow, which keeps your utilization high for longer. This compounds the damage to your score over time.

Cheaper alternatives to a cash advance

Before you take a cash advance, explore these options, which are almost always cheaper.

Borrow from family or friends: If someone you trust can lend you the money, this costs you nothing in interest or fees. If you want to be formal about it, you can write a simple repayment agreement, but many people just repay informally. The main risk is damaging the relationship if you cannot repay on time.

Personal loan from a bank or credit union: A personal loan typically charges 6 to 36 percent APR, depending on your credit score and the lender. Even at the high end, this is usually cheaper than a cash advance, and you have a fixed repayment schedule so you know exactly when you will be done. Credit unions often offer lower rates than banks if you are a member.

Payday loan: These are short-term loans meant to tide you over until your next paycheck. They charge high fees (often $15 to $20 per $100 borrowed) but are meant to be repaid in two weeks, so the total cost is sometimes lower than a cash advance if you repay quickly. However, many people roll over payday loans and end up paying far more. Only use this if you are certain you can repay in one or two pay periods.

Use a debit card or withdraw from savings: If you have a bank account with money in it, withdraw from that instead. This costs nothing and does not create debt. If you do not have savings, this is not an option, but it is worth checking whether you do.

Ask for a payment plan: If you owe money to a creditor, merchant, or utility company, call and ask whether they offer a payment plan. Many do, and the cost is zero. This works for medical bills, overdue rent, and other debts.

What happens if you cannot pay back a cash advance

If you take a cash advance and cannot pay it back, the balance stays on your credit card and accrues interest every day. After 30 days of non-payment, the late payment appears on your credit report and your score drops. After 60 days, your interest rate may increase further. After 180 days, the card issuer may charge off the debt and sell it to a collection agency.

A collection agency can then sue you for the money, garnish your wages (depending on your state), or place a lien on your property. This is why taking a cash advance you cannot afford to repay is dangerous — the debt does not go away, and the consequences compound.

If you are already struggling with debt, a cash advance will make it worse, not better. Contact a nonprofit credit counselor (through the National Foundation for Credit Counseling or a local housing authority) before you borrow more money.

Frequently Asked Questions

Can I take a cash advance if I have bad credit?

Yes. Credit card companies allow cash advances to anyone with an active card, regardless of credit score. However, if your credit is bad, your cash advance limit may be very low, and your interest rate will be higher. This makes a cash advance even more expensive for people with bad credit, which is backwards — it is the people who can least afford it who pay the most.

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

No. Both appear as part of your credit card balance. However, the interest rate and fees are different, and if you miss a payment, the entire balance (including the cash advance) is reported as late. There is no separate line item for cash advances on your credit report.

What if my credit card company denies my cash advance?

This can happen if your cash advance limit is zero, if you have already hit your limit, or if the card issuer suspects fraud. Call the customer service number on the back of your card and ask why. If your limit is zero, you can request an increase, but they may decline. If you hit your limit, you have to pay down the balance first.

Is there a way to get cash without paying the cash advance fee?

Not through your credit card directly. However, some cards offer 0 percent balance transfer offers — you can transfer a balance from another card to this one at no interest for a promotional period (usually 6 to 21 months). If you transfer a cash advance from another card, you avoid the cash advance fee on the new card, but you still pay the fee on the original card. This is rarely worth the complexity.

Can I use a credit card to buy a gift card and then return it for cash?

Some retailers allow this, but most do not — they will refund you to the original payment method (your credit card) rather than giving you cash. Even if a retailer does give you cash, this is treated as a return, not a purchase, and some card issuers may flag it as suspicious activity. It is not a reliable workaround.