Getting cash from a credit card costs more than you think

You can withdraw cash using your credit card at an ATM, but it is not the same as using your debit card. A cash advance is a short-term loan from your credit card issuer. The moment you take the money out, you start paying interest — usually at a higher rate than your regular purchase APR — and you pay a fee upfront, typically 3% to 5% of the amount you withdraw.

Unlike a purchase, which has a grace period before interest kicks in, a cash advance starts charging interest immediately. There is no interest-free window. If you need cash, it is almost always cheaper to use a debit card, ask for cash back at a store, or borrow from someone you know than to take a cash advance.

That said, sometimes you have no other option. This guide explains how cash advances work, what they cost, and when they might make sense — though that situation is rare.

Key Takeaways

  • Cash advances charge interest from day one and include an upfront fee of 3% to 5%, making them significantly more expensive than regular purchases.
  • You can get a cash advance at any ATM using your credit card PIN, or by visiting your card issuer's branch or a check-cashing service.
  • The interest rate on a cash advance is usually 2% to 5% higher than your purchase APR and is calculated daily until you pay it back.
  • Cash advances do not count toward rewards or cash-back programs, so you get no benefit beyond the cash itself.
  • Paying back a cash advance should be your first priority because the interest compounds quickly and the debt is expensive.

The three ways to take a cash advance

The most common method is using an ATM. Insert your credit card, enter your PIN (which you may need to set up first if you have never used it), and withdraw the amount you need. The ATM will show you the fee before you confirm — usually $3 to $5 per transaction, plus a percentage of the amount withdrawn.

You can also visit a branch of your card issuer in person and ask the teller for a cash advance. This method has the same fees and interest rate as an ATM, but you can withdraw larger amounts and avoid ATM limits, which typically cap cash advances at $500 to $1,000 per day.

A third option is a check-cashing service or payday lender, though this is almost never worth it. These services charge their own fees on top of your credit card's cash advance fee, stacking costs on top of costs. If you are considering this route, stop and call your card issuer first — they may have hardship programs or temporary rate reductions that cost far less.

What cash advances actually cost

A cash advance has three separate costs. First, there is the upfront fee, usually 3% to 5% of the amount you withdraw. If you take out $500, you might pay $15 to $25 just to get the money. Some cards charge a flat fee instead (like $10 per transaction), which is better if you are withdrawing a large amount.

Second, there is the interest rate. Your card's cash advance APR is typically 2% to 5% higher than your purchase APR. If your purchase rate is 18%, your cash advance rate might be 23%. This rate is applied to your balance every single day until you pay it off, and the interest compounds — meaning you pay interest on the interest.

Third, there is the opportunity cost. Cash advances do not earn rewards points, cash back, or any other benefit. You are paying to borrow money with nothing to show for it except the cash itself.

Here is a real example: You take a $500 cash advance at 5% fee plus 23% APR. You pay $25 upfront. If you pay it back in 30 days without making any other charges, you owe approximately $30 in interest. Your total cost is roughly $55 for borrowing $500 for a month — an effective rate of about 11% for that month alone.

How to set up your PIN and find your cash advance limit

Before you can use an ATM with your credit card, you need a PIN. Call the customer service number on the back of your card or log into your online account and look for the option to set or reset your PIN. Some issuers let you set it immediately online; others require a phone call. This usually takes a few minutes.

Your cash advance limit is separate from your credit limit. If your credit limit is $5,000, your cash advance limit might be $1,500 or $2,000 — your issuer decides this based on your creditworthiness. You can find your cash advance limit in your online account under "Account Details" or by calling customer service. ATMs also display your available cash advance amount before you withdraw.

Daily ATM limits are set by the ATM operator, not your card issuer, and typically range from $500 to $1,000. If you need more than your daily limit, you can make multiple withdrawals on different days or visit your card issuer's branch in person.

Why paying back a cash advance should be your top priority

Once you have taken a cash advance, the interest clock is running. Unlike a credit card purchase, where you have 21 to 25 days before interest starts, a cash advance charges interest from the moment you withdraw it.

When you make a payment to your credit card, the payment is applied first to your highest-interest debt. If you have both a purchase balance and a cash advance balance, your payment goes to the cash advance first because it has the higher APR. This is good — it means you are automatically paying down the most expensive debt first.

However, if you only make the minimum payment, you are barely covering the interest, and the principal stays nearly the same. If you took a $500 cash advance at 23% APR and only pay the minimum, it could take years to pay off and cost you hundreds in interest. Pay as much as you can as fast as you can.

When a cash advance might make sense (and when it does not)

A cash advance makes sense only in very narrow situations. If you have a genuine emergency — a car repair you need to drive to work, a medical expense, a security deposit for housing — and you have no other way to pay, a cash advance is cheaper than missing work, skipping medical care, or becoming homeless. In that case, the cost is worth it.

A cash advance does not make sense if you are trying to pay another debt, fund a purchase you want, or cover regular expenses. If you are considering a cash advance to pay a payday loan, credit card, or medical bill, you are borrowing at 23% to pay a debt that might be 15% or 20% — you are making your situation worse. If you need money for groceries or utilities, contact a local food bank or utility assistance program instead.

Never take a cash advance to fund gambling, investing, or any speculative activity. The interest rate is too high to justify the risk, and you could end up in a debt spiral.

Alternatives that cost less than a cash advance

Before you use an ATM, consider these cheaper options. If you need cash for a purchase, ask the store for cash back when you pay with your debit card — it is free. If you do not have a debit card, most grocery stores, pharmacies, and gas stations will give you cash back on a credit card purchase, though some charge a small fee.

If you need money for an emergency, contact local nonprofits, religious organizations, or government programs. Many cities have emergency assistance funds for rent, utilities, or medical expenses. Call 211 (a free helpline in most areas) to find programs near you.

If you need a short-term loan, a personal loan from a bank or credit union is usually cheaper than a cash advance, even though it still costs money. Credit unions in particular often have lower rates for members in financial hardship. A payday loan is more expensive than a cash advance and should be avoided.

If you need cash because you are short on money overall, the real solution is a budget and a plan. A cash advance is a band-aid that makes the underlying problem worse. Consider talking to a nonprofit credit counselor — many offer free sessions and can help you figure out where your money is going.

Frequently Asked Questions

Can I take a cash advance if I have a 0% APR promotional offer?

No. Promotional rates apply only to purchases, not to cash advances. A cash advance will be charged at your regular cash advance APR from day one, even if you have an active 0% purchase promotion. This is one reason cash advances are so expensive — you cannot get a break on the rate.

What happens if I do not pay back a cash advance?

The interest keeps compounding, the balance grows, and it damages your credit score. After 30 days of missed payments, the late fee kicks in. After 180 days, the card issuer may charge off the account and sell the debt to a collection agency. At that point, you may be sued and have your wages garnished. Pay it back as soon as you can.

Is there a difference between a cash advance and a balance transfer?

Yes. A balance transfer moves debt from one card to another, usually with a lower promotional rate. A cash advance is a loan against your credit limit that you withdraw as cash. Balance transfers are for moving existing debt; cash advances are for getting cash. Both have fees and higher interest rates than regular purchases.

Can I use a credit card cash advance to pay off another credit card?

Technically yes, but it is a bad idea. You are borrowing at 23% to pay a debt at 18%, which costs you more money overall. If you are trying to consolidate debt, a personal loan or balance transfer to a lower-rate card is cheaper.

Do cash advances show up differently on my credit report?

No. A cash advance appears as part of your credit card balance and is reported to the credit bureaus like any other charge. However, taking a large cash advance can increase your credit utilization ratio, which may lower your credit score temporarily.