Taking cash out on a credit card costs you money upfront and charges interest immediately
A cash advance is a withdrawal of cash from your credit card account, treated as a loan from the card issuer. Unlike a purchase, which gives you a grace period before interest starts, a cash advance begins charging interest the day you take it out — there is no grace period. You also pay a separate fee, usually 3% to 5% of the amount withdrawn, charged to your account right away.
The mechanics are straightforward: you visit an ATM, bank branch, or convenience store and request cash using your credit card. The issuer approves the withdrawal up to your cash advance limit, which is often lower than your overall credit limit. The money appears in your account, the fee is added to your balance, and interest begins accruing at a rate that is typically higher than your purchase APR.
This is why cash advances are expensive compared to other ways to get cash — and why most people use them only when they have no other option.
Key Takeaways
- Cash advances charge a fee (usually 3% to 5%) and interest starting immediately, with no grace period like purchases have.
- Your cash advance limit is separate from and usually lower than your credit limit, so you cannot withdraw your full available balance.
- The interest rate on cash advances is typically 2% to 5% higher than your purchase APR, making them significantly more expensive than using a debit card or borrowing from another source.
- You can take a cash advance at an ATM, bank branch, or convenience store, but the fee and interest charges are the same regardless of location.
- Paying off a cash advance should be your priority because the interest compounds daily and the high APR makes the debt grow quickly.
Where and how to take out a cash advance
You have three main options for withdrawing cash on your credit card. An ATM is the fastest — insert your card, enter your PIN, and select the cash advance option (usually labeled separately from regular withdrawals). A bank branch — either your card issuer's bank or another bank — lets you request cash from a teller; you will need your card and ID. A convenience store or supermarket may offer cash advances at the customer service desk, though not all do.
The process is the same at each location: the transaction is approved or declined based on your cash advance limit, the fee is calculated and added to your balance immediately, and the cash is dispensed. There is no application or waiting period. You walk out with the money and the debt on your card.
Before you go, check your card's terms or call the issuer to confirm your cash advance limit. Many cards set this limit at 20% to 50% of your credit limit, so you may not be able to withdraw as much as you think. Some issuers also cap the number of cash advances you can take in a billing cycle.
The fees and interest you will pay
A cash advance fee is charged the moment you withdraw the money. This fee is either a flat dollar amount (for example, $5 or $10) or a percentage of the amount withdrawn (typically 3% to 5%), whichever is greater. A $200 cash advance with a 3% fee costs you $6 in fees alone. A $1,000 advance at 5% costs $50 upfront.
Interest begins accruing immediately at your cash advance APR, which is almost always higher than your purchase APR. While a purchase might carry a 15% APR with a 21-day grace period, a cash advance might carry a 22% APR with zero grace period. This means you are paying interest on the full amount from day one, and that interest compounds daily. On a $1,000 cash advance at 22% APR, you owe roughly $6 in interest after one week, $26 after one month, and $220 after one year if you make no payments.
The total cost of a cash advance depends on how long you carry the balance. A $500 advance with a $15 fee at 24% APR costs you $15 upfront plus interest. If you pay it back in one month, you owe roughly $10 in interest — a total cost of $25. If you carry it for six months, the interest alone reaches roughly $60, making the total cost $75.
How a cash advance affects your credit score
A cash advance does not hurt your credit score directly — the transaction itself is not reported to the credit bureaus as a separate item. However, it does increase your credit card balance, which raises your credit utilization ratio — 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 from 0% to 20%, which can lower your score by a few points.
The damage is temporary. Once you pay off the cash advance, your utilization drops and your score recovers. The real risk is if you cannot pay it back quickly and the balance sits on your card for months. A high utilization ratio sustained over time signals to lenders that you are relying heavily on credit, which can lower your score by 50 to 100 points or more.
Missing a payment on a cash advance is treated like missing any other credit card payment — it is reported to the bureaus after 30 days and damages your score significantly. The best way to avoid this is to treat a cash advance as a debt you must repay immediately, not as assistance programs.
Comparing cash advances to other ways to get cash
A cash advance is almost always the most expensive way to get cash. Here is how it compares to other options:
| Method | Upfront Cost | Interest Rate | When to Use |
|---|---|---|---|
| Debit card withdrawal | None (unless out-of-network ATM fee) | None | Anytime you need cash — this is always cheaper than a credit card cash advance |
| Credit card cash advance | 3% to 5% fee | 20% to 25% APR, no grace period | Only when you have no debit card access and cannot wait for other options |
| Personal loan from a bank or credit union | None or small origination fee | 6% to 36% APR depending on credit score | If you need a larger amount and have time to apply — often cheaper than a cash advance over time |
| Payday loan | $15 to $20 per $100 borrowed | 400% APR or higher | Avoid — more expensive than a cash advance in almost every scenario |
| Borrowing from friends or family | None | Depends on agreement | If available and you can repay on a clear timeline |
If you have a debit card, use it instead. If you do not, a personal loan from your bank or credit union is usually cheaper than a cash advance, even if the APR looks higher, because you have a grace period and a fixed repayment schedule. A cash advance should be your last resort.
Paying off a cash advance quickly
Once you take a cash advance, your priority is to pay it off as fast as possible. The interest compounds daily, so every day you carry the balance costs you money. If your card has a balance from purchases and a separate cash advance balance, check your card's payment policy — some issuers apply your payment to the lowest-interest balance first (your purchases), leaving the cash advance to accrue interest longer. Others let you direct your payment to the cash advance specifically. Call your issuer and ask which applies to your card, then direct your payment accordingly.
The fastest approach is to pay the entire cash advance balance in one lump sum as soon as you can. If you cannot do that, make the largest payment you can afford and repeat it weekly rather than waiting until the full balance is due. This reduces the number of days interest accrues and saves you money.
Do not take another cash advance to pay off the first one. This extends the debt and adds another fee on top of the existing one. If you are in a cycle of cash advances, that is a sign you need to address the underlying cash flow problem — whether that means cutting expenses, increasing income, or seeking financial counseling.
When a cash advance might make sense
Cash advances are expensive, but there are rare situations where they are the least bad option. If you need cash immediately and have no other way to get it — no debit card, no access to a personal loan, no friends or family to borrow from — a cash advance may be your only choice. This might happen during travel in a country where your debit card does not work, or in an emergency when every other option is closed.
Even in these situations, limit the amount to what you absolutely need and commit to paying it back within days, not weeks. A $100 cash advance you repay in three days costs roughly $3 in fees and $2 in interest — a total of $5. The same advance carried for a month costs $3 in fees and $18 in interest. The difference is significant.
If you find yourself regularly taking cash advances, that is a warning sign. It means your expenses are outpacing your income or your cash flow is too tight. Address the root cause rather than relying on expensive credit. A financial counselor or budget review can help identify where the money is going and what needs to change.
Frequently Asked Questions
Can I take a cash advance if I am already carrying a balance on my credit card?
Yes. A cash advance is a separate transaction from your existing balance, and most issuers do not restrict cash advances based on how much you already owe. However, your cash advance limit may be lower than your total available credit, so you may not be able to withdraw as much as you think. Check your card's terms or call the issuer to confirm your cash advance limit.
What is the difference between a cash advance and a balance transfer?
A cash advance gives you physical cash and charges a fee plus interest immediately. A balance transfer moves debt from one card to another and may offer a 0% introductory APR for a set period (usually 6 to 21 months). Balance transfers are designed to move existing debt, not to get cash. If you need cash, a cash advance is the only option; if you are trying to move debt, a balance transfer is usually cheaper.
Will taking a cash advance hurt my credit score?
Not directly, but it increases your credit utilization ratio, which can lower your score by a few points. The damage is temporary and reverses once you pay off the advance. The real risk is if you cannot pay it back and the balance sits on your card for months, which signals to lenders that you are relying heavily on credit and can lower your score significantly.
Can I take a cash advance on a rewards credit card?
Yes, but you will not earn rewards on the cash advance. Rewards are typically earned only on purchases, not on cash advances or balance transfers. This is another reason cash advances are expensive — you get no benefit from any rewards program you have on the card.
What happens if I cannot pay back a cash advance?
The balance stays on your card and continues to accrue interest at your cash advance APR. If you miss a payment, it is reported to the credit bureaus after 30 days and damages your credit score. The issuer may also increase your APR or close your account. If the debt goes unpaid for months, the issuer may sell it to a debt collector, who will contact you to recover the money. The best approach is to contact your issuer immediately if you cannot pay and ask about hardship options or a payment plan.