The main ways to get cash from a credit card
You can get cash from a credit card in three ways: a cash advance at an ATM or bank, a balance transfer check mailed to you by your card issuer, or a cash-like purchase through services like PayPal or Square Cash. Each one costs differently and hits your credit in different ways.
A cash advance is the most direct method. You insert your card into an ATM, enter a PIN (which you may need to set up first with your card issuer), and withdraw money just like you would from a debit card. The money appears in your account within one business day. A balance transfer check works differently — your card issuer mails you a check that you can deposit or cash, and the amount borrowed shows up as a balance on your card. A cash-like purchase lets you buy a money order or load funds onto a prepaid card, which you can then withdraw as cash.
The catch is that all three methods charge you fees and interest that start when ready — there is no grace period like there is for regular purchases. Understanding which method costs the least depends on how much you need, how long you will carry the balance, and what your card's terms allow.
Key Takeaways
- Cash advances charge a fee (usually 3 to 5 percent of the amount) plus a higher interest rate than regular purchases, with interest starting the day you withdraw.
- Balance transfer checks may have lower fees than ATM cash advances but carry the same high interest rates and are slower because they arrive by mail.
- Cash-like purchases through third-party services avoid some credit card fees but may charge their own fees and do not always count as a cash advance on your credit report.
- All three methods can damage your credit score because they increase your credit utilization and show up differently on your credit report than regular purchases.
- If you need cash, a personal loan or line of credit from a bank usually costs less than any credit card cash method.
How much a cash advance actually costs
The cost of a cash advance has two parts: the upfront fee and the interest. The upfront fee is usually 3 to 5 percent of the amount you withdraw — so a $500 cash advance costs $15 to $25 just to take it out. Some cards charge a flat fee instead (like $10), which is cheaper if you are withdrawing a large amount but more expensive if you are withdrawing a small amount.
The interest rate on a cash advance is almost always higher than the rate on regular purchases. If your card charges 18 percent APR on purchases, the cash advance rate might be 24 or 28 percent. Interest starts accruing the moment you withdraw the money — there is no 21-day grace period. If you withdraw $500 and pay it back in 30 days, you will owe roughly $35 in interest on top of the $15 to $25 fee, for a total cost of $50 to $60.
The math gets worse the longer you carry the balance. A $1,000 cash advance at 25 percent APR costs about $21 per month in interest alone. If you carry it for six months, interest alone will be around $130, plus the original $30 to $50 fee.
Balance transfer checks and their hidden costs
A balance transfer check is a check your card issuer mails to you that you can deposit into your bank account or cash at a check-cashing service. The amount you cash or deposit becomes a balance on your credit card. The fee is often lower than a cash advance fee — sometimes 2 to 3 percent instead of 3 to 5 percent — but the interest rate is the same high rate, and it starts when ready.
The main disadvantage is speed. A check takes 5 to 10 business days to arrive in the mail, and another 1 to 3 business days to clear if you deposit it. If you need cash today, a balance transfer check will not help. If you do use one, read the fine print: some issuers limit how many checks you can request per year, and some charge a fee just to request the checks even if you never use them.
Balance transfer checks can be useful if you are planning ahead — for example, if you know you will need cash in two weeks and want to lock in a slightly lower fee than an ATM cash advance. But for when ready cash needs, an ATM advance is faster.
Cash-like purchases: money orders and prepaid cards
Some people use their credit card to buy a money order or load funds onto a prepaid card, then withdraw the cash from that account. This method can sometimes avoid the "cash advance" label on your credit report, which matters because cash advances are flagged separately and can hurt your credit score more than regular purchases.
The problem is that many card issuers now classify these transactions as cash advances anyway, so you still pay the fee and high interest rate. Even when they do not, you are paying the money order fee or the prepaid card loading fee on top of the credit card interest. A money order typically costs $1 to $5, and a prepaid card load might cost $1 to $3. If your card issuer does not charge a cash advance fee for this transaction, you might save money — but you have to check your card's terms first, and many issuers have closed this loophole.
Services like PayPal and Square Cash let you load money onto an account using your credit card, then withdraw it as cash. These services charge their own fees (usually 2 to 3 percent for credit card loads), and the credit card company may still charge interest as if it were a cash advance. You end up paying two fees instead of one.
How cash advances affect your credit score
A cash advance hurts your credit score in two ways. First, it increases your credit utilization ratio — the percentage of your available credit that you are using. If you have a $5,000 credit limit and you take a $1,000 cash advance, your utilization jumps to 20 percent. Credit scoring models penalize high utilization, so your score drops when ready. The higher your utilization, the bigger the drop.
Second, cash advances are reported separately from regular purchases on your credit report. Credit bureaus and lenders see that you took a cash advance, which signals financial stress. Some scoring models treat cash advances as riskier than regular purchases, so the same dollar amount borrowed hurts your score more as a cash advance than as a purchase.
The damage is temporary — your score will recover once you pay off the balance and your utilization drops. But if you are planning to explore for a mortgage, car loan, or other credit in the next few months, a cash advance will lower your score at the worst possible time.
Better alternatives to credit card cash advances
Before you take a cash advance, consider these cheaper options. A personal loan from a bank or credit union usually charges 6 to 36 percent APR depending on your credit score, which is lower than almost any credit card cash advance rate. The loan is fixed — you know exactly how much you will pay and when it will be paid off. A personal loan also does not increase your credit utilization the way a cash advance does, because it is a separate account.
A line of credit from a bank works similarly but lets you borrow only what you need and pay interest only on the amount you use. Some banks offer these at rates lower than credit card cash advances. A credit union loan is often cheaper than a bank loan if you are a member, and credit unions are more likely to work with people who have lower credit scores.
If you need cash urgently and have no other option, a cash advance is faster than a personal loan (which takes a few days to fund). But if you have even a week or two, a personal loan will cost you significantly less money.
When a cash advance might make sense
A cash advance is rarely the best choice, but there are narrow situations where it might be the least bad option. If you have a 0 percent introductory APR on cash advances (rare, but some cards offer it), a cash advance might be worth the upfront fee if you can pay it back within the promotional period. If you need a small amount of cash for a very short time — say, $100 for a weekend — and you can pay it back within a week, the total cost might be only $5 to $10, which could be cheaper than a personal loan process fee.
If you are already carrying a high balance on your card and your credit score is already damaged, taking another cash advance will not hurt much more. But this is not a reason to do it — it is just an acknowledgment that the damage is already done.
The most honest answer is this: if you are considering a cash advance, you are probably in a tight spot financially. A cash advance will make that spot tighter by adding high-interest debt. A personal loan, a payment plan with a creditor, or a conversation with a nonprofit credit counselor will almost always be better uses of your time.
Frequently Asked Questions
Do I need a PIN to take a cash advance?
Yes, most ATMs require a PIN. If you have never set one up, call your card issuer or log into your online account to create one before you go to the ATM. Some card issuers let you set a PIN when ready through their app. A few banks let you take a cash advance at a branch without a PIN if you show your ID, but this is less common.
Can I take a cash advance from a credit card I just opened?
Usually yes, but some card issuers restrict cash advances for new cardholders. Check your card's terms or call the issuer to confirm. Even if you can take a cash advance, the fee and interest rate will be the same as for any other cardholder.
What happens if I cannot pay back a cash advance?
The balance stays on your card and interest keeps accruing at the high cash advance rate. Your credit score will drop further as the balance grows and your utilization stays high. After 30 days of missed payments, the issuer will report it to the credit bureaus. After 180 days, the card issuer may charge off the debt and sell it to a collection agency.
Is a cash advance the same as a balance transfer?
No. A balance transfer moves debt from one card to another (usually to take advantage of a lower introductory rate). A cash advance pulls money out as cash. They are different transactions with different fees and interest rates.
Can I use a credit card to withdraw cash from my own bank account?
No. If you need to access money in your bank account, use your debit card or visit a branch. Using a credit card to withdraw cash is always a cash advance, which charges fees and interest.