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 at an ATM, bank branch, or through a balance transfer check. The money goes into your bank account or your hand as cash, not onto a store receipt. Unlike a purchase, a cash advance starts charging interest when ready — there is no grace period — and the interest rate is usually higher than your purchase rate.
The process is straightforward: you visit an ATM or bank, insert your card, enter your PIN, and withdraw cash up to your cash advance limit. Your credit card company sets this limit separately from your regular credit limit, and it is often much lower. A $5,000 credit limit might come with only a $1,000 cash advance limit. The money appears in your account within one business day, but the cost starts right away.
You repay a cash advance the same way you repay purchases — through your monthly credit card bill. However, because interest accrues from day one, the longer you carry the balance, the more you owe. Most card issuers also charge an upfront fee, usually 3 to 5 percent of the amount you withdraw, taken out before you receive the cash.
Key Takeaways
- Cash advances charge interest from the moment you withdraw the money, with no grace period like purchases have.
- Your cash advance limit is separate from your credit limit and is typically much lower than the amount you can charge.
- Most issuers charge an upfront fee of 3 to 5 percent of the withdrawal amount, plus a higher interest rate than purchases.
- You can get a cash advance at an ATM, bank branch, or through a balance transfer check from your card issuer.
- Cash advances report to credit bureaus and affect your credit utilization, which can lower your credit score.
Where to get a cash advance
The easiest place is an ATM. Insert your credit card, enter your PIN (which you may need to set up first if you have never taken a cash advance), and select the withdrawal amount. Most ATMs that accept credit cards will process the transaction, though some may charge an additional ATM operator fee on top of your card issuer's fee.
You can also visit a bank branch in person. Walk in with your credit card and ask the teller for a cash advance. They will verify your identity, confirm the amount, and hand you cash. This method works well if you want to withdraw a large amount or if you prefer speaking to a person.
A third option is a balance transfer check. Your card issuer mails these checks to you, and you can write one to yourself and deposit it into your bank account. The check amount counts as a cash advance and carries the same fees and interest rate. This method takes longer because of mail delivery, but it can be useful if you do not have a PIN set up yet.
Fees and interest rates you will pay
The upfront fee is usually your first cost. Most card issuers charge between 3 and 5 percent of the amount you withdraw. If you take out $500, expect to pay $15 to $25 just to get the cash. Some cards charge a flat fee instead — for example, $10 per advance — though this is less common.
The interest rate on cash advances is higher than on purchases. While a card might charge 18 percent APR on purchases, the cash advance rate could be 25 percent or higher. This rate applies to your balance from the day you withdraw the money, not from your statement date. If you carry the balance for a full month, you will owe roughly one-twelfth of the annual rate in interest alone.
Some cards offer promotional rates on purchases but never on cash advances. Cash advances are treated as a separate category and do not may have access to for any introductory offer. Check your card's terms or call the issuer's customer service line to confirm the exact cash advance fee and interest rate before you withdraw.
How to set up your PIN and prepare to withdraw
If you have never taken a cash advance before, you will need a PIN (personal identification number). Call the customer service number on the back of your card and ask to set up a cash advance PIN. The representative will walk you through creating a four-digit number. This usually takes a few minutes and is free.
Once your PIN is active, you can use it at any ATM that accepts your card brand. Visa and Mastercard ATMs are widely available; American Express and Discover ATMs are less common but still found in many banks and airports. If you plan to use a balance transfer check instead, no PIN is needed — the check arrives in the mail within 7 to 10 business days.
Before you withdraw, know your cash advance limit. Log into your online account or call customer service to check how much you can take out. This limit is separate from your credit limit and is often much smaller. If you need more cash than your limit allows, you cannot increase it on the spot — you would have to wait until you repay the advance or contact the issuer to request a higher limit.
What happens to your credit score
A cash advance affects your credit in two ways. First, it increases 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 can lower your credit score, even if you pay the balance in full the next month.
Second, the cash advance appears on your credit report as a separate transaction type. Credit bureaus track purchases, cash advances, and other borrowing separately. Some scoring models treat cash advances as riskier than purchases, which can have a larger negative impact on your score than a purchase of the same amount would.
The impact is temporary. Once you repay the cash advance, your utilization drops and the negative effect fades. However, if you carry the balance for several months, the damage to your score can be significant. Paying off the cash advance quickly is one of the best ways to minimize credit score harm.
Alternatives to consider before taking a cash advance
A cash advance should usually be a last resort because of the high fees and interest rates. Before you take one, explore other options. A personal loan from a bank or credit union often has a lower interest rate and no upfront fee. A payday loan, while controversial, may have a lower total cost if you repay it within two weeks. A balance transfer to a card with a 0 percent introductory rate can save you money if you have time to transfer the balance before withdrawing cash.
If you need cash for an emergency, ask friends or family for a short-term loan. If you need cash for a purchase, use your debit card or a regular credit card purchase instead — purchases have a grace period and a lower interest rate. If you are short on cash because of a temporary income gap, contact your creditors to ask about hardship programs or payment deferrals.
A cash advance makes sense only when you need cash when ready, have no other source, and can repay it within a few weeks. If you find yourself taking cash advances regularly, that is a sign to review your budget or seek help from a financial counselor.
How to repay a cash advance quickly
The cash advance balance appears on your monthly credit card statement along with your purchases. You can repay it in three ways: pay the full statement balance, pay more than the minimum payment, or make an extra payment before your statement closes.
Paying the full balance is the fastest way to stop interest from accruing. If you took a $500 cash advance and your statement is due in 20 days, paying the full $500 plus the upfront fee before the due date means you owe only the fee, not the interest. If you cannot pay the full amount, pay as much as you can as soon as possible — every dollar you pay reduces the interest you owe.
Some card issuers allow you to make a payment online, by phone, or by mail before your statement closes. Paying early can reduce the interest charged on that billing cycle. Check your card's website or call customer service to confirm the payment method and whether early payments are applied to the cash advance balance first or split across your purchases and cash advance.
Frequently Asked Questions
Can I take a cash advance if I have a low credit limit?
Yes, but your cash advance limit is usually much lower than your credit limit. A $1,000 credit limit might come with only a $300 cash advance limit. Contact your issuer to confirm your cash advance limit before you try to withdraw.
What is the difference between a cash advance and a balance transfer?
A balance transfer moves debt from one card to another, while a cash advance gives you cash. Both charge fees and interest, but balance transfers sometimes offer promotional rates. Cash advances never do. Use a balance transfer to move existing debt; use a cash advance to get cash in hand.
Will a cash advance show up on my credit report?
Yes, cash advances appear on your credit report and affect your credit utilization and score. The impact is temporary and fades once you repay the balance, but carrying a cash advance for several months can lower your score noticeably.
Can I avoid the cash advance fee?
No. Every credit card issuer charges a fee for cash advances, usually 3 to 5 percent of the amount. There is no way to waive it, though some cards have lower fees than others. Compare cards if you plan to take cash advances regularly.
What if I cannot repay the cash advance?
Contact your card issuer and explain your situation. Some issuers offer hardship programs that lower your interest rate or pause payments temporarily. Carrying an unpaid cash advance will damage your credit score and increase the total amount you owe due to interest.