A cash advance is when you borrow money directly from your credit card issuer, using your card's credit line instead of making a purchase

You walk to an ATM, insert your credit card, and withdraw cash. The transaction feels like using a debit card, but the money comes from your credit card company, not your bank account. That borrowed cash is a cash advance, and it costs more than a regular purchase.

The extra cost comes in three forms: a one-time fee (usually 3 to 5 percent of the amount you withdraw), a higher interest rate than your purchase APR, and interest that starts accruing immediately—there is no grace period like there is for purchases. A $500 cash advance at 5 percent fee plus 25 percent APR will cost you $25 upfront and roughly $10 in interest after one month if you do not pay it back.

Key Takeaways

  • Cash advances charge a fee (typically 3 to 5 percent) at the moment you withdraw, plus a higher interest rate than purchases, with no grace period.
  • Interest on a cash advance begins accruing the day you withdraw it, so even a short-term advance costs money if you carry a balance.
  • Your credit card's cash advance limit is often lower than your overall credit limit, and you can find it in your cardholder agreement or by calling your issuer.
  • Paying back a cash advance is slower than paying back purchases because payments go to the lowest-APR balance first, meaning your high-interest advance sits longer.

How the fees and interest rates work

When you take a cash advance, your credit card company charges a cash advance fee at the moment of withdrawal. This fee is a percentage of the amount you take out—typically 3, 4, or 5 percent, though some cards charge a flat dollar amount instead (like $10 minimum). A $300 advance at 4 percent costs $12 immediately. This fee is added to your balance.

The cash advance APR is separate from your purchase APR and is almost always higher. If your card offers 0 percent APR on purchases for 12 months, that offer does not apply to cash advances. Your cash advance APR might be 25 percent while your purchase APR is 18 percent. Interest on the cash advance starts the day you withdraw it—there is no 21-day grace period like there often is for purchases.

This means a $500 cash advance at a 5 percent fee and 25 percent APR costs you $25 upfront plus roughly $10 in interest after one month if you carry the balance. Over six months, the interest alone could exceed $60.

Where you can get a cash advance

You can withdraw a cash advance at any ATM that displays your card network's logo (Visa, Mastercard, American Express, or Discover). You can also visit a bank branch or credit union and ask the teller to process a cash advance on your credit card—they will treat it the same way as an ATM withdrawal. Some credit card issuers also allow you to request a check drawn against your credit line, which functions as a cash advance.

The amount you can withdraw is limited by your cash advance limit, which is often lower than your overall credit limit. If your credit limit is $5,000, your cash advance limit might be $1,500. You can find your cash advance limit in your cardholder agreement (usually available online in your account portal) or by calling the customer service number on the back of your card.

How cash advances affect your credit score

Taking a cash advance does not directly hurt your credit score, but it raises your credit utilization ratio. If you have a $5,000 credit limit and you take a $500 cash advance, your utilization jumps to 10 percent. Credit scoring models treat utilization as a sign of financial stress, so higher utilization can lower your score slightly. The effect is temporary—once you pay off the advance, your utilization drops and your score recovers.

A cash advance also appears on your credit report as a separate transaction type, which some lenders view differently than a regular purchase. This does not change your score directly, but it is visible to anyone reviewing your report.

Why paying back a cash advance takes longer

When you make a payment on a credit card with multiple balances, the payment goes to the lowest-APR balance first. If you have a $200 purchase at 18 percent APR and a $300 cash advance at 25 percent APR, and you send in a $100 payment, that $100 goes toward the purchase, not the cash advance. Your high-interest cash advance keeps accruing interest while you pay down the lower-rate purchase.

This is called the lowest-APR-first rule, and it is set by federal law (the CARD Act of 2009). It means you should pay off cash advances as quickly as possible, because they will sit on your balance longer than other debt. If you need to borrow cash, a personal loan or a line of credit from your bank often has a lower rate and no upfront fee.

When a cash advance might make sense

A cash advance is rarely the cheapest way to borrow money, but there are narrow situations where it is the fastest option. If you need cash for an emergency and you do not have time to visit your bank or apply for a loan, an ATM withdrawal takes seconds. The cost is high, but the speed is real.

Some people use cash advances to move money between accounts quickly—for example, to cover a check that is about to clear. This is expensive and should be a last resort, but it is faster than waiting for a bank transfer. If you find yourself regularly needing cash advances, that is a sign your budget has a gap or your emergency fund is too small.

Alternatives to cash advances

If you need cash, explore these options before using a cash advance. A personal loan from a bank or credit union typically charges 6 to 36 percent APR with no upfront fee, making it cheaper than a cash advance in most cases. A line of credit works similarly and lets you borrow only what you need. A balance transfer to a card with a 0 percent introductory APR can move high-interest debt to a cheaper card, though this does not give you cash.

If you have a 401(k), some plans allow you to borrow against your balance at a low rate. If you own a home, a home equity line of credit (HELOC) typically charges much less than a credit card. None of these are perfect, but all are cheaper than a cash advance in most situations.

Frequently Asked Questions

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

Yes, but it is expensive. The cash advance fee and high APR apply, and you are essentially borrowing at 25 to 30 percent to pay off debt at 18 to 22 percent. A balance transfer (moving the balance directly from one card to another) is almost always cheaper because many cards offer 0 percent APR on transfers for 6 to 21 months.

Does a cash advance show up on my credit report?

Yes, it appears as a separate transaction type on your report, visible to lenders and creditors. It does not change your score directly, but it raises your utilization ratio, which can lower your score slightly until you pay it off.

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

Interest keeps accruing at your cash advance APR (usually 25 percent or higher), and the balance grows. If you miss payments, your credit score drops, late fees are added, and the issuer may freeze your card or pursue collection. Unpaid cash advances can stay on your credit report for seven years.

Is there a way to avoid the cash advance fee?

No. The fee is charged at the moment you withdraw, and it is non-refundable. Some cards have lower fees than others (3 percent versus 5 percent), so if you know you will need a cash advance, comparing fees beforehand can save money.

Can I get a cash advance with a debit card?

No. A debit card draws from your bank account, not a credit line. What looks like a cash advance with a debit card is usually just a withdrawal, and it does not cost a fee or interest (though your bank may charge a fee if you withdraw from an out-of-network ATM).