What a credit card cash advance is and how it works
A cash advance is when you borrow money directly from your credit card issuer using your card, an ATM, or a bank teller. Unlike a purchase, the money goes into your pocket as cash rather than paying a merchant. The issuer treats it as a loan against your credit limit, and you start paying interest on it when ready — there is no grace period like there is for purchases.
The process is straightforward: you initiate the advance, receive the cash, and the amount appears on your next credit card statement as a separate line item from your regular purchases. You then pay it back like any other credit card balance, though the interest rate is usually higher than your purchase APR.
Key Takeaways
- You can get a cash advance at an ATM using your PIN, at a bank teller with your card and ID, or through a convenience check mailed by your issuer.
- Cash advances charge interest from day one with no grace period, and the interest rate is typically 3 to 5 percentage points higher than your purchase rate.
- Most issuers charge an upfront fee of 3 to 5 percent of the amount withdrawn, which is added to your balance when ready.
- The amount you can withdraw is limited by your cash advance limit, which is usually lower than your total credit limit and set by your issuer.
- Cash advances report to credit bureaus and count toward your credit utilization, which can lower your credit score if the balance is high.
Three ways to withdraw a cash advance
At an ATM: Insert your credit card and enter your PIN. Select "cash advance" or "withdrawal" from the menu. The ATM will show your available cash advance limit and let you choose the amount. The cash dispenses when ready. This is the fastest method and works 24/7.
At a bank teller: Walk into any bank branch (not necessarily your own bank) with your credit card and a photo ID. Tell the teller you want a cash advance. They will process it like a debit transaction, verify your identity, and hand you the cash. This usually takes 5 to 10 minutes.
Using a convenience check: Your credit card issuer may mail you blank checks tied to your credit line. You write one to yourself, deposit it in your bank account, and the amount is treated as a cash advance. This method is slower — the check takes several days to clear — but useful if you do not have your card with you or your PIN is not working.
Fees and interest you will pay
Every cash advance comes with two costs. The cash advance fee is charged upfront and ranges from 3 to 5 percent of the amount you withdraw, though some issuers charge a flat fee (often $5 to $10) if that is higher. This fee is added to your balance when ready, so if you withdraw $500 with a 4 percent fee, you owe $520 right away.
The interest rate on a cash advance is separate from your purchase APR and is almost always higher — often 5 to 10 percentage points above your regular rate. If your purchase APR is 18 percent, your cash advance APR might be 23 percent. Interest accrues daily from the moment you withdraw the cash, with no grace period. On a $500 advance at 23 percent APR, you will owe roughly $9.58 in interest after one month if you make no payments.
These costs add up quickly. A $500 cash advance with a 4 percent fee ($20) and 23 percent APR will cost you about $30 in the first month alone if you do not pay it back when ready.
Your cash advance limit versus your credit limit
Your credit card issuer sets a separate cash advance limit that is usually much lower than your total credit limit. If your credit limit is $5,000, your cash advance limit might be $1,000 or $1,500. This limit is set by the issuer based on your creditworthiness and payment history, and you cannot change it yourself.
You can call your issuer's customer service number (on the back of your card) and ask what your cash advance limit is. Many issuers also show this information in your online account portal under "Account Details" or "Credit Limits." If you need a higher limit, you can request an increase, though the issuer may deny it or require a hard credit inquiry.
Keep in mind that using a cash advance reduces your available credit. If you have a $5,000 credit limit and a $1,000 cash advance limit, and you withdraw $500 in cash, you have $500 left in cash advance availability and $4,500 in purchase availability.
How cash advances affect your credit score
A cash advance appears on your credit report as a balance and counts toward your credit utilization ratio — the percentage of your available credit you are currently using. If you have a $5,000 credit limit and carry a $500 cash advance balance, your utilization is 10 percent. Credit scoring models penalize high utilization, so a large cash advance can lower your score temporarily.
The advance itself does not trigger a hard inquiry (which would also lower your score), because you are using existing credit rather than requesting new credit. However, the balance will remain on your report until you pay it off, and it will continue to drag down your score as long as it sits there.
Paying off the cash advance quickly is the best way to minimize credit damage. Even paying half of it within 30 days will lower your utilization and help your score recover.
When a cash advance makes sense and when it does not
A cash advance is rarely the cheapest way to borrow money. A personal loan from a bank or credit union usually has a lower interest rate and no upfront fee. A line of credit, if you have one, is often cheaper. Even a payday loan, despite its bad reputation, sometimes costs less than a cash advance when you factor in both the fee and the interest rate.
Cash advances make sense only in specific situations: you need cash when ready and have no other option, you can pay it back within days (so interest does not compound), or you are using it to avoid a late payment or overdraft fee that would cost more. For example, if you are $200 short on rent and a late payment would trigger a $35 late fee plus damage your credit, a $200 cash advance with a $10 fee and a few dollars in interest is the better choice.
Cash advances do not make sense if you are using them to fund everyday spending, to pay off other debts, or if you cannot pay back the full amount within a month. In those situations, the interest and fees will compound, and you will end up paying far more than you borrowed.
How to pay back a cash advance
A cash advance appears as a separate line on your credit card statement, and you can pay it back like any other balance. You can make a payment online through your issuer's website or app, by phone, by mail, or in person at a branch. Most issuers let you set up automatic payments so the advance is paid down on a schedule.
Pay the cash advance balance before your purchase balance if possible, because the interest rate is higher. If you have $300 in purchases at 18 percent APR and $200 in cash advance at 23 percent APR, paying down the cash advance first saves you more in interest.
Some issuers explore your payment to the lowest-interest balance first, so check your statement or call customer service to confirm how your issuer handles multiple balances. If they explore payments to purchases first, you can request that payments go to the cash advance instead.
Frequently Asked Questions
Can I get a cash advance if I have a low credit score?
Yes. A cash advance uses your existing credit line, not new credit, so your score does not have to be high. However, your issuer may have set a low cash advance limit when they opened your account, so you may only be able to withdraw a small amount. Call your issuer to find out what limit you have.
What happens if I do not pay back a cash advance?
It works like any other credit card balance. Interest accrues daily, late fees kick in if you miss a payment, and the balance damages your credit score. If you do not pay for several months, the issuer may close your account and send the debt to a collection agency.
Is there a difference between a cash advance and a balance transfer?
Yes. A cash advance gives you cash in hand and charges a higher interest rate. A balance transfer moves debt from one card to another and often has a lower introductory rate. Use a cash advance when you need actual cash; use a balance transfer when you are moving existing debt.
Can I withdraw a cash advance from a credit card that is not mine?
No. You need the physical card and your PIN, or you need to be an authorized user on the account. Attempting to use someone else's card without permission is fraud.
Do I have to use my PIN to get a cash advance?
At an ATM, yes. At a bank teller, no — you only need your card and ID. If you do not have a PIN set up, call your issuer to request one, or ask a teller to process the advance for you.