What a cash advance credit card does
A cash advance credit card is a card that lets you withdraw cash from an ATM or get cash at a bank counter, and the amount you withdraw is added to your credit card balance. You pay interest on that cash from the moment you take it out — there is no grace period like there is for purchases. The interest rate for cash advances is usually higher than the rate for regular purchases on the same card.
The card issuer charges a cash advance fee on top of the interest. This fee is typically 3% to 5% of the amount you withdraw, with a minimum of $5 to $10. So if you withdraw $200, you might pay $6 to $10 just to get the cash, before any interest charges begin.
Cash advances are different from balance transfers, which move debt from one card to another. A cash advance puts new debt on your card in the form of actual cash in your pocket.
Key Takeaways
- Cash advances charge interest when ready with no grace period, and the interest rate is usually 2% to 5% higher than your purchase rate.
- You pay an upfront fee of 3% to 5% of the amount withdrawn, on top of all interest charges.
- The total cost of a small cash advance can exceed 10% of the amount within the first month.
- Cash advances should be used only when you have no other way to get cash and you can pay back the balance quickly.
How the interest and fees add up
The real cost of a cash advance comes from combining the upfront fee with the daily interest. If your card charges a 3% cash advance fee and a 24% annual interest rate on cash advances, a $500 withdrawal costs you $15 in fees when ready. Then interest begins accruing the same day at roughly 0.066% per day (24% divided by 365 days). After 30 days, you owe an additional $8 in interest, for a total of $23 on a $500 advance.
If you only make minimum payments, the interest compounds and the total cost grows much faster. A $500 cash advance at 24% interest with a 3% fee can cost you $100 or more if you take a year to pay it back, because you are paying interest on the interest.
Some cards offer a lower cash advance rate for the first 30 or 60 days, but this is rare. Read your card's terms carefully — the cash advance APR is listed separately from your purchase APR.
Where you can get a cash advance
You can withdraw cash at any ATM that displays your card's logo (Visa, Mastercard, American Express, or Discover). You can also go to a bank branch and ask the teller for a cash advance, though not all banks offer this service to cardholders of other banks.
ATMs usually charge an additional fee of $2 to $4 on top of your card issuer's cash advance fee. A bank teller may not charge an extra fee, but they may require you to show ID and may have limits on how much you can withdraw in a single transaction.
Some credit cards allow you to get a cash advance by writing a check or using a special PIN at a store, but these methods are less common now. The fees and interest rates are the same regardless of where you withdraw the cash.
When a cash advance makes sense
A cash advance is worth considering only in specific situations. If you need cash for an emergency and have no other way to get it — no savings, no access to a personal loan, no friends or family who can lend — then a cash advance may be better than missing a payment on something critical like rent or utilities.
The key is to pay it back as fast as possible. If you can pay off the entire balance within a week or two, the interest cost stays low. If you are going to carry the balance for months, the total cost becomes very high, and you should look for other options first.
A cash advance is almost never the right choice if you are using it for everyday spending or to cover a shortfall you expect to repeat. That pattern suggests you need a budget adjustment or a different financial tool, not a high-interest cash withdrawal.
Alternatives to cash advances
A personal loan from a bank or credit union usually has a lower interest rate than a cash advance, even if your credit is not perfect. The rate depends on your credit score and income, but personal loans often range from 6% to 36% APR, compared to 20% to 30% for cash advances. You also pay the interest only on the amount you borrow, with no separate upfront fee.
A payday loan from a lender is faster to get than a personal loan, but the cost is often higher than a cash advance. Payday loans typically charge $15 to $20 per $100 borrowed, which works out to 400% APR or more if you roll the loan over.
If you have a savings account, withdrawing from savings costs nothing and avoids debt entirely. If you have a 401(k) or similar retirement account, some plans allow you to borrow against your own balance at a low rate, though this has tax consequences if you do not repay on time.
Asking a friend or family member for a loan, while sometimes awkward, costs nothing and gives you time to repay without interest.
How cash advances affect your credit score
A cash advance itself does not appear on your credit report as a separate item. However, it increases your credit card balance, which raises your credit utilization ratio — the percentage of your available credit that you are using. If you normally use 20% of your available credit and a $500 cash advance pushes you to 40%, your credit score may drop by a few points.
The drop is usually temporary. Once you pay down the balance, your utilization drops and your score recovers. However, if you carry the cash advance balance for months while making only minimum payments, the high utilization can keep your score lower for longer.
Missing a payment on a cash advance has the same impact as missing any other credit card payment — it damages your credit score and may trigger late fees and a higher interest rate on your entire card balance.
Comparing cash advance features across card types
| Card Type | Cash Advance Fee | Cash Advance APR | Grace Period |
|---|---|---|---|
| Standard credit card | 3% to 5% | 20% to 30% | None — interest starts when ready |
| Premium rewards card | 3% to 5% | 20% to 30% | None — interest starts when ready |
| Secured credit card | 3% to 5% | 20% to 30% | None — interest starts when ready |
| Business credit card | 2% to 5% | 18% to 28% | None — interest starts when ready |
The terms for cash advances are remarkably similar across card types. The main difference is that some premium cards or cards from credit unions may offer slightly lower fees or rates, but the difference is usually only 0.5% to 1%. No card offers a grace period on cash advances, and no card makes cash advances cheaper than taking out a personal loan.
When you are comparing cards, do not assume that a card with a lower purchase APR will have a lower cash advance APR. The two rates are set independently, and a card with a competitive purchase rate may still charge 25% or higher for cash advances.
Frequently Asked Questions
Can I use a credit card cash advance to pay another credit card bill?
Technically yes, but it is a bad idea. You are borrowing at 24% or higher to pay off debt that might be at a lower rate. You also pay the cash advance fee on top, so you are spending money just to move debt around. If you are struggling to pay multiple cards, contact a credit counselor or look into a balance transfer card instead.
What happens if I do not pay back a cash advance?
The balance stays on your credit card and accrues interest every day. If you miss a payment, you are charged a late fee (usually $25 to $40) and your interest rate may increase. The missed payment is reported to credit bureaus and damages your credit score. After 180 days of non-payment, the card issuer may close your account and send the debt to a collection agency.
Is there a limit to how much I can withdraw as a cash advance?
Yes. Most card issuers set a cash advance limit that is lower than your total credit limit — often 20% to 50% of your available credit. You can find your cash advance limit in your card agreement or by calling the issuer. Some ATMs also have daily withdrawal limits that are separate from your card's limit.
Do I earn rewards points on a cash advance?
No. Rewards cards do not award points or cash back on cash advances. You pay the fee and interest with no benefit. This is another reason cash advances are expensive — you get no value back for the cost.
Can I get a cash advance on a debit card?
No. Debit cards draw directly from your bank account and do not allow cash advances. If you need cash and your debit card account is low, you would need to transfer money from another account or use a credit card instead.