You can withdraw cash from a credit card, but it is not the same as using a debit card
A cash advance is a withdrawal of cash from your credit card account. Unlike a debit card, which pulls money from your bank account, a cash advance borrows against your credit limit. The card issuer treats it as a loan, not a purchase — which means you pay interest when ready, often at a higher rate than your regular purchase APR, and you start paying fees the moment you take the money out.
You can get a cash advance at an ATM using your credit card PIN, at a bank teller window, or through a cash advance check that comes with your credit card statement. The money appears in your account within one to three business days, depending on your bank. But the cost of that convenience is steep enough that most people should avoid it unless they have no other option.
Key Takeaways
- Cash advances charge interest from day one with no grace period, unlike purchases, which often have 21 to 25 days interest-free.
- Most card issuers charge a cash advance fee of 3 to 5 percent of the amount withdrawn, in addition to the higher interest rate.
- You can withdraw cash at an ATM, bank branch, or through a convenience check, but all three routes charge the same fees and interest.
- Paying back a cash advance is slower than paying back purchases because your payments go to purchases first, leaving the advance to accrue interest longer.
- If you need cash urgently, a personal loan, credit union loan, or even a payday loan may cost less than a credit card cash advance.
How much a cash advance actually costs you
A cash advance has three costs: the cash advance fee, the interest rate, and the lost grace period. If you withdraw $500, you pay a fee upfront — usually 3 to 5 percent of the amount, so $15 to $25 — before you even leave the ATM. That fee is added to your balance when ready.
Then interest starts accruing the same day. Your cash advance APR is typically 2 to 5 percentage points higher than your purchase APR. If your purchase rate is 18 percent, your cash advance rate might be 23 percent. On a $500 advance at 23 percent, you pay roughly $9.58 per month in interest alone if you do not pay it back.
Unlike purchases, which usually have a grace period of 21 to 25 days before interest kicks in, cash advances charge interest from day one. There is no grace period. And when you make a payment to your credit card, the payment goes to your lowest-interest balance first — usually your purchases — leaving the cash advance to sit and accrue interest longer.
Where you can withdraw cash and what each option requires
You have three ways to get cash from a credit card. An ATM withdrawal is the fastest: insert your card, enter your PIN, and withdraw up to your cash advance limit (which is often lower than your credit limit). Most ATMs charge an additional ATM operator fee of $2 to $3 on top of your card issuer's fee, so your total cost can reach 8 percent or more.
A bank teller withdrawal works at any bank or credit union branch. Bring your credit card and ID, tell the teller you want a cash advance, and they will process it. No ATM fee applies, but your card issuer's cash advance fee still does. This route takes longer than an ATM but costs slightly less.
A convenience check is a check that comes with your credit card statement. You write it like a regular check and deposit it into your bank account or cash it at a store. The funds arrive in your account within one to three business days. Convenience checks carry the same cash advance fees and interest rates as ATM withdrawals, but they let you move money into your checking account instead of carrying cash.
Why your payment goes to purchases first, not the cash advance
Credit card issuers explore your payment to your lowest-interest balance first. If you have both purchases and a cash advance on the same card, your payment goes to the purchase balance (usually 18 percent APR) before it touches the cash advance (usually 23 percent APR). This is the law in most states.
That means if you withdraw $500 as a cash advance and also have $500 in purchases, and you pay $300 toward your card, all $300 goes to the purchase balance. The cash advance sits untouched, accruing interest at the higher rate. You have to pay off the entire purchase balance before your payments start reducing the cash advance.
This is why a cash advance can become expensive fast. You are paying a high interest rate on money that your own payments are ignoring. If you need to withdraw cash, plan to pay it back as quickly as possible, or the interest will compound faster than you expect.
Cheaper alternatives to a credit card cash advance
Before you use a cash advance, consider what else is available. A personal loan from a bank or credit union usually has a lower APR than a cash advance — often 6 to 12 percent — and you pay one fixed payment each month with no surprise fees. You can borrow $500 to $50,000 depending on your credit and income. The loan takes three to five business days to fund, so it is not when ready, but the cost is usually half or less of a cash advance.
A credit union loan is often cheaper still. If you are a member, you can borrow against your savings account (called a share-secured loan) at rates as low as 5 to 8 percent, sometimes with approval the same day. You do not need perfect credit. If you do not have a credit union account, you can open one at most credit unions in your area.
A payday loan is a short-term loan of $300 to $1,000 due in two weeks. It sounds expensive — the fee is often $15 to $20 per $100 borrowed — but if you need $500 for two weeks, a payday loan costs roughly $75 to $100, which is less than a cash advance fee plus interest. The catch is that payday loans are designed to be rolled over, and rolling over the loan multiple times makes it expensive. Use it only if you can pay it back in one cycle.
If you have a savings account with money in it, withdraw from savings instead. You lose the interest you would have earned, but you avoid all fees and interest charges. If you have a 401(k), some plans allow loans against your balance at rates near prime, though you have to repay them or face taxes and penalties.
How to find your cash advance limit and APR
Your cash advance limit is different from your credit limit. You might have a $5,000 credit limit but only a $1,500 cash advance limit. Your card issuer sets this limit based on your credit score and payment history. You can find your cash advance limit in your online account, on your statement, or by calling the customer service number on the back of your card.
Your cash advance APR is also listed in your online account or on your statement under "Rates and Fees" or "APRs." Write it down. Compare it to the APRs of a personal loan or credit union loan before you decide to withdraw. A five-minute phone call to a credit union can tell you whether a loan is cheaper, and it usually is.
What happens if you cannot pay back the cash advance
If you do not pay back a cash advance, it becomes part of your credit card balance and accrues interest at your cash advance rate. If you miss a payment, your card issuer reports it to the credit bureaus, and your credit score drops. After 30 days late, you may face a late fee. After 60 days, your interest rate may jump to a penalty APR, which can be 29 percent or higher.
If the balance goes unpaid for six months or longer, the card issuer may charge off the account and sell the debt to a collection agency. A collector can then sue you for the balance, and if they win, they can garnish your wages or freeze your bank account. This is why paying back a cash advance quickly matters — the longer it sits, the more it costs and the more damage it does to your credit.
Frequently Asked Questions
Can I withdraw more cash than my credit limit allows?
No. Your cash advance limit is separate from and usually lower than your credit limit. You cannot exceed your cash advance limit, even if you have unused credit available. If you need more cash than your limit allows, you would have to use another card or find a different source of funds.
Do I need a PIN to get a cash advance?
You need a PIN for ATM withdrawals. If you do not have one, call your card issuer to request one — it usually arrives by mail within five to seven business days. For bank teller withdrawals and convenience checks, you do not need a PIN, just your card and ID.
Will a cash advance hurt my credit score?
A cash advance itself does not hurt your score, but it increases your credit utilization — the percentage of your available credit you are using. If you have a $5,000 limit and withdraw $500, your utilization jumps to 10 percent. High utilization can lower your score slightly. Missing a payment on the cash advance will hurt your score much more.
Can I transfer a cash advance balance to another card?
Most balance transfer offers exclude cash advances. Even if you transfer the balance, it usually transfers at your cash advance APR, not the promotional rate. You are better off paying the cash advance back with money from another source or using a personal loan instead.
What is the difference between a cash advance and a balance transfer?
A balance transfer moves debt from one card to another. A cash advance withdraws cash from your card. Balance transfers sometimes have lower introductory rates (0 percent for 6 to 12 months), while cash advances charge interest when ready. If you need cash, a cash advance is your only option. If you need to move existing debt, a balance transfer may be cheaper.