What a cash advance on a credit card is
A cash advance is when you borrow money directly from your credit card issuer and receive it as cash. You go to an ATM, a bank branch, or a convenience store, use your credit card, and walk away with dollars in your pocket. The amount you can withdraw is limited by your card's cash advance limit, which is usually lower than your overall credit limit — often 20 to 50 percent of it.
The catch is that cash advances cost more than regular credit card purchases. You pay an upfront fee (typically 3 to 5 percent of the amount withdrawn), and the interest rate on the cash advance is usually higher than your standard purchase APR. Interest starts accruing when ready — there is no grace period like there is for purchases. If you borrow $500 at a 5 percent fee and 25 percent APR, you owe $525 right away, plus interest that begins the same day.
Key Takeaways
- Cash advances charge an upfront fee (usually 3 to 5 percent) plus a higher interest rate than purchases, with no grace period.
- Your cash advance limit is separate from your credit limit and is often much lower — sometimes 20 to 50 percent of your total available credit.
- Interest on a cash advance starts the day you withdraw the money, so the longer you carry the balance, the more you pay.
- Payments toward a cash advance are applied after purchases are paid off, so carrying both makes the advance more expensive.
- Most credit cards offer cash advances, but some cards designed for people rebuilding credit may not.
Where you can get a cash advance
You can withdraw a cash advance from any ATM that displays your card's logo — Visa, Mastercard, American Express, or Discover. You insert your card, enter your PIN, and select the cash withdrawal amount. The ATM will show you the fee before you confirm, so you know the cost upfront.
You can also visit a bank branch or credit union and ask a teller for a cash advance. Some convenience stores and check-cashing businesses offer cash advances too, though they may charge an additional fee on top of your card issuer's fee. The fastest and cheapest route is usually an ATM at your own bank or a bank in your card issuer's network, because they often waive the ATM operator fee (though your card issuer's cash advance fee still applies).
How much the cash advance will cost you
The total cost depends on three numbers: the amount you withdraw, the upfront fee percentage, and the interest rate. Let's say you withdraw $1,000 on a card with a 4 percent cash advance fee and a 26 percent APR. You owe $1,040 when ready. If you pay it back in one month, you owe roughly $1,062 (the $40 fee plus about $22 in interest). If you carry it for six months, you owe closer to $1,170.
The interest rate on cash advances varies by card and by your creditworthiness. Some cards charge 20 to 22 percent APR on cash advances; others charge 25 to 30 percent. Check your card's terms or call the number on the back of your card to find out your specific cash advance APR and fee before you withdraw. The fee is usually a flat percentage, but a few cards charge a flat dollar amount (like $5 or $10) instead — whichever is higher.
One often-missed detail: if you carry both a purchase balance and a cash advance balance, your payment goes toward the purchase first. The cash advance sits there accruing interest at the higher rate while you pay down the cheaper debt. This is why carrying a cash advance alongside regular purchases is especially expensive.
When a cash advance makes sense
A cash advance is rarely the cheapest way to borrow money. A personal loan from a bank or credit union, a payday loan (if your state allows them), or even a short-term loan from a friend is usually cheaper. But there are situations where a cash advance is the only option available to you right now.
If you need cash when ready and have no other source, a cash advance gets you the money in minutes. If you can pay it back within a few weeks, the interest cost stays small — the fee is the bigger expense. If you have a 0 percent APR promotional period on your card and the cash advance is included in that offer (some are, some are not — check your terms), the cost is just the upfront fee, which may be worth it for emergency cash.
A cash advance is not a good choice if you cannot pay it back quickly, if you already carry a balance on the card, or if you are considering it to fund a purchase you cannot otherwise afford. In those cases, the interest and fees will compound faster than you can pay them down.
How cash advances affect your credit
Taking a cash advance does not directly hurt your credit score the way a missed payment does. However, it does increase your credit utilization — the percentage of your available credit you are using. If your credit limit is $5,000 and you take a $1,000 cash advance, your utilization jumps to 20 percent. High utilization (above 30 percent) can lower your score slightly.
The bigger credit risk is carrying the balance. If you cannot pay off the cash advance quickly, you will carry a high-interest balance month after month. Missed payments or accounts sent to collections will damage your credit far more than the cash advance itself. The cash advance is just the first step — what matters for your credit is whether you can pay it back on time.
Cards that offer cash advances versus cards that don't
Most standard credit cards — whether they are rewards cards, travel cards, or basic cards — offer cash advances. The terms vary, but the feature is standard. Some cards marketed to people rebuilding credit do not offer cash advances, or they offer them only after you have held the card for a certain period.
If you are comparing cards and cash advances matter to you, check the card's terms document (called the Schumer box or pricing and terms table) before you open the account. Look for the cash advance APR, the cash advance fee, and your cash advance limit. Some cards list these clearly; others bury them in the full terms. If you cannot find the information online, call the card issuer's customer service line and ask directly.
Alternatives to a cash advance
Before you take a cash advance, consider whether one of these options is cheaper or faster. A personal loan from a bank or credit union usually has a lower interest rate than a cash advance, though it takes a few days to fund. A balance transfer to a 0 percent APR card (if you have good credit) costs a 3 to 5 percent transfer fee but no ongoing interest. Borrowing from family or friends costs nothing if they are willing. A payday loan is expensive but sometimes faster than a personal loan, though it is illegal in some states.
If you need cash for an emergency and have no savings, a cash advance is fast and available. But if you have a few days, a personal loan is usually cheaper. If you have good credit and can wait a week or two, a balance transfer card might be the best option. The key is knowing your options before you need the cash.
Frequently Asked Questions
Can I use a cash advance to pay off other debts?
Yes, you can use the cash to pay any bill or debt. However, because the cash advance APR is usually higher than your credit card purchase APR, you are often better off using a balance transfer instead if you are moving debt between cards. If you are paying off a personal loan or medical bill, a cash advance works, but a personal loan or line of credit is usually cheaper.
What happens if I don't pay back the cash advance?
The balance stays on your credit card and accrues interest at the cash advance rate. If you miss the minimum payment, you will be charged a late fee and your credit score will drop. If the account goes unpaid for 180 days, it will be reported as a charge-off and sold to a debt collector. At that point, the collector can sue you for the debt.
Is there a limit to how much I can withdraw?
Yes. Your card issuer sets a cash advance limit, which is usually 20 to 50 percent of your total credit limit. You can find your limit in your online account or by calling customer service. The limit is separate from your purchase limit, so taking a cash advance does not reduce the amount you can spend on purchases.
Do I have to pay back a cash advance before I can use my card again?
No. You can continue to use your card for purchases while you carry a cash advance balance. However, any payment you make goes toward the purchase balance first, so the cash advance keeps accruing interest. This is why carrying both is expensive — you are paying the higher cash advance rate while you pay down the cheaper purchase balance.
Can I get a cash advance from a credit card with a 0 percent APR offer?
It depends on the card. Some 0 percent APR offers include cash advances; most do not. Check your card's terms or call customer service to confirm. If the cash advance is not covered by the 0 percent offer, you will pay the standard cash advance APR and fee even during the promotional period.