Yes, you can take cash out of a credit card, but it costs more than a purchase and starts charging interest when ready
A cash advance is a withdrawal of money from your credit card account, treated as a loan rather than a purchase. Your card issuer gives you cash (usually through an ATM, bank teller, or convenience check) and charges you a fee upfront, plus interest that begins accruing the same day — there is no grace period like there is for regular purchases.
Most people use cash advances only when they have no other option, because the cost is steep. A typical cash advance fee runs 3 to 5 percent of the amount withdrawn, and the interest rate is often 2 to 3 percentage points higher than your regular purchase APR. If you withdraw $500 at a 5 percent fee and 25 percent APR, you pay $25 when ready and then $10.42 per month in interest alone (before paying down the principal).
The mechanics are straightforward: you visit an ATM with your credit card PIN, request cash, and the amount is added to your credit card balance. Some cards also allow cash advances through a bank teller or by writing a convenience check. The issuer sets a cash advance limit, which is usually lower than your credit limit and is determined by your creditworthiness.
Key Takeaways
- Cash advances charge an upfront fee (typically 3 to 5 percent) plus a higher interest rate than purchases, with interest starting when ready.
- Your cash advance limit is separate from your credit limit and is set by your card issuer based on your credit profile.
- Interest accrues daily from the moment you withdraw the cash, so the longer you carry the balance, the more you pay.
- Paying back a cash advance should be your priority because the interest rate is usually the highest rate on your card.
How much a cash advance actually costs you
The total cost depends on three things: the fee percentage, the interest rate, and how long you carry the balance. Card issuers disclose all three in your card agreement, but the numbers vary widely by issuer and by your creditworthiness.
A concrete example: you withdraw $300 from a card with a 4 percent cash advance fee and a 24 percent APR. You pay $12 upfront (the fee). If you pay back the full $312 in 30 days, you owe roughly $6.24 in interest, for a total cost of $18.24. If you take six months to pay it back, the interest alone climbs to about $37, and you have paid $49 total. If you only make minimum payments and carry it for a year, the interest can exceed $75.
The interest calculation is daily, not monthly. Each day you carry the balance, the issuer charges you (APR ÷ 365) × your outstanding balance. This is why paying it back quickly matters so much — every week you delay costs you real money.
Where to get a cash advance and what you need
Most credit cards allow cash advances at ATMs that display your card's logo (Visa, Mastercard, American Express, Discover). You need your card and your PIN. If you have forgotten your PIN, you can call the number on the back of your card and request a new one, though it may take a few business days to arrive.
Some banks also allow cash advances at the teller window if you bring your card and ID. This method sometimes has a lower fee than an ATM withdrawal, so it is worth asking. Convenience checks (checks issued by your card company that draw from your credit line) are another option, though fewer issuers offer them now.
ATMs outside your card issuer's network often charge an additional ATM fee on top of the cash advance fee — sometimes $2 to $5. Using an ATM owned by your bank or card issuer avoids this extra charge.
Why your cash advance limit is lower than your credit limit
Card issuers set a separate, lower limit for cash advances because the risk profile is different. A purchase can be disputed or reversed; a cash advance cannot. Once you have the money, the issuer has no recourse if you do not pay. This is why they limit how much you can withdraw, even if your overall credit limit is higher.
Your cash advance limit is determined by your credit score, income, payment history, and how much you already owe. It is not negotiable in the way a credit limit increase is — you cannot call and request a higher cash advance limit. If you need more cash than your limit allows, your only option is to wait until you have paid down the balance.
How a cash advance affects your credit score
Taking a cash advance does not directly hurt your credit score, but carrying a high balance does. Your credit utilization ratio — the percentage of your available credit you are using — makes up about 30 percent of your credit score. If you withdraw $500 on a $2,000 limit, your utilization jumps to 25 percent, which can lower your score slightly.
The bigger impact comes if you carry the balance for months. The longer you owe money, the more your utilization stays high, and the more your score suffers. Additionally, if you miss a payment on the cash advance, that late payment stays on your credit report for seven years and can drop your score significantly.
The best approach is to treat a cash advance like an emergency loan: pay it back as fast as you can to bring your utilization back down and minimize interest charges.
Alternatives to a cash advance
Before you take a cash advance, consider whether another option costs less. A personal loan from a bank or credit union often has a lower interest rate and no upfront fee. If you have a 401(k), some plans allow loans against your balance at a lower rate than a cash advance. A payday loan is usually more expensive than a cash advance, so that is not a better option.
If you need cash for an emergency, asking family or friends for a short-term loan costs nothing. If that is not possible, a 0 percent APR personal loan (available to people with good credit) can be cheaper than a cash advance even with a small origination fee. Some employers offer paycheck advances or hardship loans — it is worth asking your HR department.
If you are in a bind and have no other options, a cash advance is a legitimate tool, but it should be a last resort. The cost is real, and the interest rate is punishing, so the faster you pay it back, the less damage it does to your finances.
Frequently Asked Questions
Does a cash advance show up differently on my credit report than a regular purchase?
No, both appear as a balance on your credit card account. However, the cash advance interest rate and fee are tracked separately by your issuer, so you can see exactly how much the cash advance is costing you in your monthly statement.
Can I use a cash advance to pay another credit card bill?
Technically yes, but it is a bad idea. You are borrowing at a high interest rate with an upfront fee to pay off another debt, which costs you more money overall. Pay the other card with income or savings instead if at all possible.
What happens if I only make the minimum payment on a cash advance?
The balance stays on your card and continues to accrue interest at the higher cash advance rate. Minimum payments are calculated to keep you in debt as long as possible, so you will pay far more in interest than if you paid the full balance quickly.
Is there a way to avoid the cash advance fee?
No. The fee is mandatory and is charged at the time of withdrawal. Some cards offer slightly lower fees (2 to 3 percent instead of 4 to 5 percent), but you cannot avoid it entirely. The only way to minimize the total cost is to pay back the balance as quickly as possible.
Can I take a cash advance from a credit card I just opened?
Usually yes, but your cash advance limit may be very low when the account is new. As your payment history builds and your creditworthiness improves, the issuer may increase your cash advance limit over time.