Drawing cash from a credit card costs you more than a purchase does
You can withdraw cash from a credit card at an ATM, bank teller, or through a cash advance at a store — but the moment you do, you start paying interest and fees that a regular purchase does not charge. A cash advance is a short-term loan against your credit limit, and it treats your credit card like a debit card for cash only.
The cost hits you three ways: an upfront fee (usually 3 to 5 percent of the amount you withdraw), a higher interest rate than purchases (often 5 to 10 percentage points above your purchase APR), and interest that starts accruing when ready — there is no grace period like there is for purchases. If you withdraw $500, you might pay $15 to $25 just to get the cash, then interest on the full $500 from day one.
Before you use this option, understand that it is one of the most expensive ways to borrow money. A personal loan, payday alternative loan, or even a credit card balance transfer usually costs less. But if you need cash now and have no other option, here is how it works and what to watch for.
Key Takeaways
- Cash advances charge an upfront fee of 3 to 5 percent plus a higher interest rate than purchases, with interest starting when ready.
- You can withdraw cash at an ATM using your PIN, at a bank teller with your card and ID, or through a store cash advance.
- Your credit card issuer sets a separate cash advance limit, which may be lower than your total credit limit.
- Interest on a cash advance is paid down last when you make a payment, so purchases on the same card get paid off first.
- If you regularly need cash, a personal loan or credit union membership may cost less over time than repeated cash advances.
Three ways to withdraw cash using your credit card
ATM withdrawal is the fastest method. You insert your credit card into an ATM, enter your PIN (which you may need to set up first if you have never used it), and withdraw cash up to your daily limit. Your card issuer sets this limit separately from your credit limit — it might be $500 per day even if your credit limit is $5,000. The ATM operator may also charge a fee ($2 to $3) on top of your card issuer's cash advance fee.
Bank teller withdrawal works if you visit a branch of your card issuer or a bank that has a partnership with them. Bring your credit card and a photo ID. The teller processes it as a cash advance and hands you the money. This method avoids the ATM operator fee but still charges your card issuer's cash advance fee and interest.
Store cash advance lets you ask a cashier at a retail store to advance you cash against your credit card. Not all stores offer this, and those that do usually charge their own fee on top of your card issuer's fee. This is the most expensive route and the least common.
What fees and interest rates you will pay
Every credit card issuer sets its own cash advance fee and APR. Call the number on the back of your card or log into your online account to find these numbers before you withdraw — they vary widely. A typical cash advance fee runs 3 to 5 percent of the amount withdrawn, with a minimum fee of $5 to $10. So a $200 withdrawal might cost $6 to $10 in fees alone.
The interest rate on cash advances is usually 5 to 10 percentage points higher than your purchase APR. If your purchase rate is 18 percent, your cash advance rate might be 25 percent. This higher rate applies only to the cash advance balance, not to purchases on the same card — but that matters less than you might think, because of how payments are applied.
Interest on a cash advance starts the day you withdraw it. There is no grace period, unlike purchases, which often have 21 to 25 days before interest kicks in. This means a $500 cash advance at 25 percent APR costs you about $3.42 per day in interest alone, before you even make a payment.
How your cash advance limit works
Your credit card issuer sets a separate cash advance limit, which is usually 20 to 50 percent of your total credit limit. If your credit limit is $5,000, your cash advance limit might be $1,000 or $2,500. You cannot withdraw more than this limit, even if you have unused credit available.
When you withdraw cash, it counts against both your cash advance limit and your total credit limit. A $500 withdrawal reduces your available credit by $500 and your available cash advance limit by $500. Once you pay off the cash advance, both limits reset.
You can contact your card issuer to ask them to lower or raise your cash advance limit, but they do not have to agree. Some issuers let you set it to zero if you want to prevent yourself from using this feature.
Why paying back a cash advance takes longer than you think
When you make a payment on a credit card with both a cash advance and purchases, the payment is applied to the lowest-interest balance first — which means your purchases get paid off before your cash advance does. This is the opposite of what most people expect.
Here is an example: You have a $300 purchase at 18 percent APR and a $200 cash advance at 25 percent APR. You make a $200 payment. That $200 goes entirely toward the purchase, leaving the full $200 cash advance untouched and accruing interest at 25 percent. You have to pay off the entire purchase before any payment touches the cash advance.
To pay off a cash advance faster, make a payment larger than your total balance, or contact your issuer and ask them to explore extra payments directly to the cash advance. Some issuers allow this; others do not. Check your account terms or call to confirm.
When a cash advance makes sense and when it does not
A cash advance makes sense only in a genuine emergency when you have no other option — a car repair you need today, a medical bill, or an urgent travel cost. Even then, it should be a last resort because the cost is high.
It does not make sense if you are using it to pay off other debt, fund a purchase you could delay, or cover regular expenses. In those cases, a personal loan from a bank or credit union, a payday alternative loan from a credit union, or a balance transfer to a 0 percent APR card will cost you less.
If you find yourself needing cash advances regularly, that is a sign your budget does not match your income. A credit counselor can help you build a plan that does not rely on borrowing for cash. Many nonprofits offer free counseling — search for "credit counseling" plus your city name, or call 211 for a referral.
Alternatives that cost less than a cash advance
A personal loan from a bank or credit union usually charges 6 to 36 percent APR with no upfront fee, depending on your credit score and the lender. Even at the high end, this is cheaper than a cash advance's upfront fee plus interest. The loan is fixed, so you know exactly how much you owe and when it will be paid off.
A payday alternative loan (PAL) is offered by federal credit unions and some state credit unions. These are small loans of $200 to $1,000 with APRs capped at 28 percent and no upfront fee. You repay over one to six months. To get one, you must be a member of the credit union, which usually requires a small deposit ($5 to $25).
A balance transfer to a card offering 0 percent APR for 6 to 21 months lets you move a cash advance to a new card with no interest during the promotional period. You will pay a balance transfer fee (usually 3 to 5 percent), but if you pay off the balance before the promotion ends, you save the ongoing interest. This works only if you have time to pay before the rate jumps.
Borrowing from family or friends, if that option exists, costs nothing and builds no debt. If you do this, put the terms in writing — how much, when you will repay, and whether there is interest — to avoid misunderstandings.
Frequently Asked Questions
Can I use a credit card cash advance to pay off another credit card?
Technically yes, but it is expensive. You pay the cash advance fee and high interest rate on the amount you withdraw, then use that cash to pay the other card. A balance transfer (moving the balance directly from one card to another) costs less because it skips the cash advance fee and often offers a lower promotional rate.
Does a cash advance hurt my credit score?
It can. A cash advance increases your credit utilization (the percentage of your credit limit you are using), which can lower your score. It also appears as a separate transaction on your credit report. The impact is usually temporary and smaller than missing a payment, but it is real.
What is the daily limit on a cash advance?
Your card issuer sets a daily ATM withdrawal limit, usually $200 to $500 per day. This is separate from your cash advance limit. You can withdraw up to your daily limit at an ATM, but if you need more cash, visit a bank teller or call your issuer to request a one-time increase.
Can I get a cash advance if I have a low credit score?
Yes. A cash advance does not depend on a credit check — it is a withdrawal against credit you already have. As long as you have available cash advance limit, you can withdraw. This is why cash advances are tempting when you have poor credit and cannot get a loan elsewhere, but the high cost makes them a trap.
What happens if I cannot pay back a cash advance?
The balance stays on your credit card and accrues interest at your cash advance rate. If you miss payments, your credit score drops, your interest rate may increase, and the issuer can pursue collection. Contact your issuer when ready if you cannot pay — some offer hardship programs that lower your rate or pause interest temporarily.