What a credit card cash advance is and how it works
A cash advance on a credit card is a short-term loan against your available credit. You withdraw cash from an ATM, bank teller, or through a convenience check, and the amount is added to your credit card balance. Unlike a purchase, a cash advance starts charging interest when ready — there is no grace period — and the interest rate is typically higher than your regular purchase rate.
The process is straightforward: you visit an ATM or bank branch, enter your PIN or card details, and withdraw up to your cash advance limit. That limit is usually lower than your total credit limit and varies by card issuer. The cash appears in your account within minutes, but the debt appears on your credit card statement within one to two business days.
Cash advances are useful when you need physical cash and have no other when ready option, but they are expensive. Because interest starts accruing the same day you withdraw, even a week-long cash advance costs more than a week of purchases on the same card.
Key Takeaways
- Cash advances charge interest from day one with no grace period, and the interest rate is usually 3 to 5 percentage points higher than your purchase rate.
- You can withdraw cash at an ATM using your PIN, at a bank teller with your card and ID, or through a convenience check mailed by your card issuer.
- Most cards charge an upfront fee of 3 to 5 percent of the amount withdrawn, on top of the daily interest.
- The cash advance limit is separate from your credit limit and is typically 20 to 50 percent of your total available credit.
- Paying off a cash advance should be your first priority because the interest rate makes it the most expensive form of credit card debt.
Where to get a cash advance and what you need
You have three main routes: an ATM, a bank teller, or a convenience check. An ATM is the fastest. You insert your card, enter your PIN, select "cash advance" or "withdraw cash," and choose your amount. The transaction completes in seconds. You will need to know your PIN; if you do not have one, call your card issuer to set one up before you go to the ATM.
A bank teller is slower but works if you do not have a PIN or prefer not to use an ATM. Bring your credit card and a government-issued ID. Tell the teller you want a cash advance on your credit card, not a withdrawal from a checking account. The teller will process it and hand you cash. This usually takes 5 to 10 minutes.
A convenience check is a check your card issuer mails to you, drawn against your credit line. You write it like a regular check and deposit it into your bank account. These arrive in the mail and take several days to clear, so they are useful only if you have time to wait. Not all card issuers offer them.
ATMs are available 24/7, but not all ATMs accept all cards. Your card issuer's own ATMs always work. Other banks' ATMs may charge an additional fee on top of the cash advance fee. Convenience checks and bank tellers are available only during business hours.
Fees and interest rates for cash advances
Every cash advance carries two costs: an upfront fee and daily interest. The upfront fee is charged once, when you withdraw. It ranges from 3 to 5 percent of the amount withdrawn on most cards, though some cards charge a flat fee of $5 to $10 instead. A $300 cash advance with a 4 percent fee costs $12 when ready.
Interest accrues daily from the moment you withdraw, at a rate called the cash advance APR. This rate is printed in your card's terms and conditions and is almost always higher than your purchase APR. Where a purchase might carry 18 percent APR, a cash advance on the same card might be 23 or 24 percent. The difference varies by card and by issuer.
Interest is calculated by multiplying your balance by the daily rate (APR divided by 365) and compounds daily. A $300 cash advance at 24 percent APR costs about $2 in interest per day. After one week, you owe $14 in interest plus the $12 upfront fee. After one month, interest alone exceeds $18.
Some cards offer a 0 percent introductory rate on purchases but not on cash advances. Cash advances are never included in a 0 percent offer. This is why a cash advance is one of the most expensive ways to borrow on a credit card.
Your cash advance limit and how it is set
Your card issuer sets a separate cash advance limit that is lower than your total credit limit. If your credit limit is $5,000, your cash advance limit might be $1,500 or $2,000. The issuer determines this based on your credit score, payment history, and income at the time they approve your card.
You can find your cash advance limit in your card's online account, in your cardholder agreement, or by calling the customer service number on the back of your card. Ask the representative: "What is my cash advance limit?" They will tell you the exact amount you can withdraw.
If you need a higher limit, you can request an increase by calling customer service. The issuer may grant it, deny it, or offer a smaller increase. There is no cost to ask, but approval is not may provide and depends on your current credit profile.
Your cash advance limit is separate from your purchase limit. If you have a $5,000 credit limit and a $1,500 cash advance limit, you can spend $5,000 on purchases or withdraw $1,500 in cash, but not both at full amounts simultaneously. Withdrawing $1,500 in cash leaves you $3,500 in purchase credit.
How to pay back a cash advance quickly
Because cash advances charge interest from day one, paying them back should be your first priority after any minimum payment. When you make a payment to your credit card, the issuer applies it to your balance in a specific order set by law: first to the highest-interest debt, then to lower-interest debt. This means your payment goes to the cash advance before it goes to purchases, which is what you want.
Make your payment as soon as you can. If you withdraw $300 on a Monday and pay it back on Friday, you owe five days of interest. If you wait until the statement closes and then pay, you owe 30 days of interest. The difference is small on $300 but compounds quickly on larger amounts.
Pay more than the minimum. Your statement will show a minimum payment, usually 1 to 3 percent of your balance. Paying only the minimum means the cash advance sits on your card for months, accruing interest. If you can pay the full amount within a week or two, do so.
If you cannot pay the full amount when ready, consider whether a cash advance was the right choice. A personal loan from a bank or credit union, a payday loan (if your state allows them), or borrowing from family might have been cheaper. For future cash needs, building an emergency fund or keeping a small amount of cash at home can avoid the need for a cash advance altogether.
When a cash advance makes sense and when it does not
A cash advance makes sense in a genuine emergency when you need cash and have no other option. Examples: your car breaks down and the mechanic takes cash only, you are traveling and your debit card stops working, or you need cash for a medical copay and your bank is closed. In these cases, the cost is worth the when ready access to money.
A cash advance does not make sense for everyday spending, even if you prefer cash. If you need cash regularly, withdraw it from your checking account at an ATM instead. If you do not have a checking account, opening one costs nothing and avoids the 3 to 5 percent fee plus daily interest.
A cash advance also does not make sense to pay off other debt, even high-interest debt. If you owe $2,000 on a personal loan at 15 percent APR and take a cash advance at 24 percent APR to pay it off, you have made your situation worse. The only exception is if the cash advance rate is genuinely lower than the debt you are paying off, which is rare.
Avoid using a cash advance to fund spending you cannot afford. If you are considering a cash advance to pay for groceries, rent, or other regular expenses, the real problem is that your income does not cover your costs. A cash advance will make that problem worse by adding interest and fees.
Alternatives to a credit card cash advance
If you need cash and want to avoid the high cost of a cash advance, consider these options first. A personal loan from a bank or credit union typically charges 6 to 36 percent APR with no upfront fee and a fixed repayment schedule. The interest rate is lower than a cash advance, and you know exactly when the debt will be paid off.
A balance transfer to a card with a 0 percent introductory rate can reduce interest on existing debt, though it does not help you get cash. If you already have a cash advance on your card, transferring that balance to a 0 percent card can save hundreds in interest, but the transfer itself usually charges a 3 to 5 percent fee.
Borrowing from family or friends costs nothing if they agree, though it can strain relationships if repayment is unclear. If you go this route, put the agreement in writing: the amount, when it will be repaid, and whether interest is involved.
A line of credit from your bank, if you have one, usually charges less interest than a cash advance and lets you draw cash as needed. These are less common than they once were, but worth asking your bank about if you anticipate needing cash regularly.
Frequently Asked Questions
Can I use a cash advance to pay off another credit card?
Technically yes, but it is almost always a bad idea. You are borrowing at 24 percent APR (plus a 3 to 5 percent fee) to pay off debt that might be at 18 percent APR. You have made the debt more expensive, not less. The only exception is if the card you are paying off has a much higher rate and you are paying it off when ready.
What happens if I do not pay back a cash advance?
The balance stays on your credit card and accrues interest daily. After 30 days, the missed payment appears on your credit report and damages your credit score. After 60 to 90 days, your card issuer may close your account and refer the debt to a collection agency. Interest and fees continue to accumulate the entire time.
Does a cash advance hurt my credit score?
Taking a cash advance itself does not hurt your score. However, if the cash advance increases your credit utilization (the percentage of your credit limit you are using), your score may drop slightly. Paying it back quickly restores your score. Missing payments on a cash advance will damage your score significantly.
Can I get a cash advance without a PIN?
Yes. You can visit a bank teller with your credit card and government ID and request a cash advance. The teller will process it without a PIN. You can also use a convenience check if your card issuer offers them. ATMs require a PIN.
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 cannot withdraw more than that amount. You can find your limit in your account online or by calling customer service.