The three 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 to your checking account, or a cash-like purchase at certain retailers. Each one costs you differently and hits your credit in different ways, so the choice depends on what you need the money for and how quickly you need it.
A cash advance is the most direct route — you go to an ATM, insert your card, and withdraw money just like you would from a debit card. A balance transfer moves money from your credit card to your bank account, usually through your card issuer's app or website. A cash-like purchase (sometimes called a "cash advance alternative") lets you buy a money order or gift card at a store and convert it back to cash, though this is slower and often more expensive than the other two.
Key Takeaways
- Cash advances charge a fee (usually 3 to 5 percent of the amount) plus a higher interest rate than regular purchases, starting when ready with no grace period.
- Balance transfers to your bank account are faster than ATM withdrawals and sometimes have lower fees, but you still pay interest from day one.
- Both methods count against your available credit and may lower your credit score because they increase your credit utilization ratio.
- If you need cash for an emergency, a personal loan or credit union loan often costs less than a credit card cash advance.
Cash advances at ATMs and banks
A cash advance at an ATM is the quickest way to get physical cash. You insert your credit card, enter your PIN (which you may need to set up first with your card issuer), and withdraw money up to your cash advance limit. Your card issuer sets this limit separately from your regular credit limit — it is often 20 to 30 percent of your total credit limit, though it varies by card and issuer.
The cost is when ready and steep. Most card issuers charge a fee of 3 to 5 percent of the amount you withdraw, with a minimum fee of $5 to $10. So if you withdraw $500, you might pay $15 to $25 just in fees. On top of that, the interest rate on a cash advance is usually 2 to 3 percentage points higher than your regular purchase rate, and it starts accruing the moment you withdraw the money — there is no grace period like there is for regular purchases. If your purchase APR is 18 percent, your cash advance APR might be 21 percent.
You can also get a cash advance at a bank branch, which works the same way but requires you to go in person with your card and ID. Some banks let you do this at their teller window, though not all credit card issuers support this method.
Balance transfers to your bank account
A balance transfer to your checking or savings account is a faster way to move money than waiting at an ATM, and the fees are sometimes lower. You log into your credit card issuer's app or website, find the balance transfer option, and request a transfer to your linked bank account. The money usually arrives within one to three business days.
The fee for a balance transfer is typically 3 to 4 percent, slightly lower than a cash advance fee at an ATM. However, interest still starts accruing when ready, with no grace period. The interest rate is usually the same as your cash advance rate, not your regular purchase rate, so it is still higher than what you pay on regular purchases.
Not all credit card issuers offer balance transfers to your bank account — some only allow you to transfer balances between cards. Check your card issuer's website or call the number on the back of your card to see if this option is available to you.
Why cash advances cost more than regular purchases
Credit card issuers treat cash advances differently because they see them as riskier. When you make a regular purchase, the merchant guarantees the transaction and the card issuer knows what you bought. With a cash advance, the issuer has no way to know how you will use the money or whether you will be able to repay it, so they charge more to cover that risk.
The higher cost shows up in three places: the upfront fee (3 to 5 percent), the higher interest rate (usually 2 to 3 points above your purchase rate), and the lack of a grace period. On a regular purchase, you have 21 to 25 days before interest starts. On a cash advance, interest starts the day you withdraw the money. If you carry a balance, this adds up quickly.
For example, a $1,000 cash advance with a 4 percent fee costs $40 upfront. If your cash advance rate is 21 percent and you pay it back over six months, you will pay roughly $65 in interest on top of the $40 fee — a total cost of $105, or about 10.5 percent of the amount you borrowed.
How cash advances affect your credit score
A cash advance lowers 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 a $1,000 cash advance limit, and you withdraw $500, you have used 50 percent of your cash advance limit. Credit scoring models treat cash advance utilization separately from regular purchase utilization, and high utilization on either one hurts your score.
Second, the cash advance shows up as a hard inquiry or account activity on your credit report, which can cause a small temporary dip in your score. This dip is usually minor — a few points — but it is when ready.
The good news is that paying back the cash advance quickly will recover your score. Once you pay off the balance, your utilization drops and your score rebounds. The damage is temporary if you treat the cash advance as a short-term need, not a habit.
Cheaper alternatives to credit card cash advances
If you need cash and have time to explore other options, a personal loan or credit union loan usually costs less than a credit card cash advance. A personal loan from a bank or online lender charges a fixed interest rate (typically 6 to 36 percent depending on your credit) and has a fixed repayment term, so you know exactly what you will pay. There is no surprise fee, and interest does not start until you receive the money.
A credit union loan is often even cheaper if you are a member. Credit unions typically charge lower rates and fees than banks or card issuers, and they may offer emergency loans with minimal paperwork. If you belong to a credit union, call and ask about a short-term personal loan before you use a cash advance.
If you need the money today and have no other option, a cash advance is faster than a personal loan. But if you have a few days, a personal loan will save you money in the long run.
How to set up a PIN for credit card cash advances
To withdraw cash at an ATM, you need a PIN (personal identification number) for your credit card. Many people do not have one because they rarely use ATMs. You can set one up through your card issuer's website or app, or by calling the number on the back of your card.
The process usually takes a few minutes. You log in, find the "set PIN" or "cash advance PIN" option, and choose a four-digit number. Some issuers let you set it when ready; others mail it to you. Once it is set, you can use it at any ATM that accepts your card brand (Visa, Mastercard, American Express, or Discover).
Frequently Asked Questions
Can I get a cash advance if I have a low credit limit?
Yes. Your cash advance limit is usually 20 to 30 percent of your total credit limit, so even a $500 credit limit may give you a $100 to $150 cash advance limit. Call your card issuer to find out your specific cash advance limit — it is not always the same as your credit limit.
What happens if I cannot pay back a cash advance?
The balance stays on your card and interest keeps accruing at your cash advance rate. If you miss a payment, your card issuer may charge a late fee and report the missed payment to the credit bureaus, which will hurt your credit score. If the balance goes unpaid for several months, the issuer may close your account or send it to a collection agency.
Is there a limit to how much I can withdraw as a cash advance?
Yes. Your card issuer sets a cash advance limit, which is usually lower than your total credit limit. You also cannot withdraw more than your available credit. Some ATMs have daily withdrawal limits as well, so you may not be able to get all the cash you need in one day.
Do I have to pay off a cash advance before regular purchases?
No. Your card issuer treats the cash advance and regular purchases as one balance. When you make a payment, it goes toward your total balance, not one category or the other. However, because the cash advance rate is higher, it is smart to pay it off first if you can.
Can I transfer a cash advance balance to another credit card?
Usually not. Most balance transfer offers only cover regular purchase balances, not cash advances. Check the terms of any balance transfer offer before you assume you can move a cash advance to a different card.