A cash advance lets you borrow money against your credit limit, but it costs more than a regular purchase
A cash advance is a short-term loan you take from your credit card issuer. You walk into an ATM or bank, request cash up to a portion of your available credit, and the money appears in your account. The card company treats it as a loan, not a purchase — which means you pay interest when ready, often at a higher rate than your regular APR, plus an upfront fee.
Most people use cash advances when they need physical cash and have no other way to get it quickly. The cost is steep enough that it should be a last resort, not a convenience. If you have a choice between a cash advance and waiting for a paycheck, waiting is cheaper.
Key Takeaways
- Cash advances charge an upfront fee (usually 3 to 5 percent of the amount) plus a higher interest rate than purchases, with interest accruing when ready.
- You can take a cash advance at an ATM using your PIN, at a bank branch with your card and ID, or through a convenience check from your card issuer.
- Your available cash advance limit is often lower than your total credit limit and varies by card and issuer.
- The total cost of a $500 cash advance can easily exceed $50 to $75 in fees and interest within the first month, depending on your APR.
Where you can get a cash advance
Most credit card issuers let you take a cash advance in three ways. The first is at an ATM — you insert your card, enter your PIN, and withdraw cash up to your available cash advance limit. The second is at a bank branch, where you show your card and ID to a teller and request cash. The third is a convenience check, a blank check mailed to you by your card issuer that you can deposit or cash like any other check.
ATMs are the fastest route if you need cash the same day. Bank branches are slower but let you withdraw larger amounts. Convenience checks take days to arrive and days more to clear, so they are useful only if you are not in a hurry.
Not all ATMs accept all cards. Your card issuer's website or the back of your card lists which ATM networks accept your card. If you use an out-of-network ATM, you may pay an additional fee on top of the cash advance fee.
Fees and interest rates for cash advances
A cash advance costs you money in two ways. First, there is an upfront fee, usually between 3 and 5 percent of the amount you withdraw. A $500 advance costs $15 to $25 just to get the cash. Second, there is interest, which starts accruing the moment you take the advance — not at the end of the billing cycle like a purchase. Most card issuers charge a higher APR for cash advances than for purchases, often 5 to 10 percentage points higher.
If your purchase APR is 18 percent and your cash advance APR is 25 percent, a $500 advance costs you roughly $10 in interest in the first month alone, on top of the $15 to $25 upfront fee. Over three months, the total cost could exceed $50.
Check your card's terms or call your issuer to find out your specific cash advance fee and APR. These vary by card and by issuer, and some cards do not offer cash advances at all.
How much you can borrow
Your cash advance limit is separate from your credit limit and is usually lower. If your credit limit is $5,000, your cash advance limit might be $1,500 or $2,000. Some issuers set it at 20 to 50 percent of your total credit limit; others use a fixed dollar amount. You cannot borrow more than this limit, and you cannot borrow more than your available credit.
If you have a $5,000 limit and a $3,000 balance, your available credit is $2,000. If your cash advance limit is $1,500, you can take a maximum $1,500 advance. Your issuer's website or a call to customer service will show you your current cash advance limit and available balance.
The step-by-step process
If you decide to take a cash advance, here is what happens. First, locate an ATM or bank branch that accepts your card. Second, insert your card and enter your PIN (at an ATM) or show your card and ID to a teller (at a bank). Third, request the amount you need, up to your available cash advance limit. Fourth, the machine or teller will confirm the fee and interest rate, then dispense the cash.
The money appears in your account when ready if you use an ATM. If you use a bank branch, it may take one business day. If you use a convenience check, it takes three to five business days to clear. The advance shows up on your next statement as a separate line item from your regular purchases, and you begin paying interest on it right away.
You repay a cash advance the same way you repay any credit card balance — by making a payment to your card issuer. Payments go toward your lowest-interest debt first, so if you have both purchases and a cash advance, your payment will cover the purchase balance before the cash advance. Pay more than the minimum to reduce the advance faster.
Why cash advances are expensive compared to other borrowing
A cash advance is almost always more expensive than other ways to borrow money. A personal loan from a bank or credit union typically charges 6 to 36 percent APR with no upfront fee. A payday loan charges a flat fee but no interest. A credit card purchase charges interest only after the grace period ends, usually 21 days. A cash advance charges both a fee and interest from day one.
Even a high-interest credit card purchase is cheaper than a cash advance on the same card, because you get a grace period and a lower APR. If you need cash, explore other options first: a personal loan, a line of credit, a payment plan with the person or business you owe, or straightforward waiting until you have the cash. A cash advance should be your last resort.
When a cash advance might make sense
A cash advance is rarely the right choice, but there are narrow situations where it is better than the alternative. If you need cash to pay a debt that will cost you more than the cash advance fee and interest — for example, a late fee or overdraft fee that compounds daily — a cash advance might be cheaper. If you need cash to cover an emergency and have no other way to get it, a cash advance is better than missing a payment or going without.
Even in these cases, the cash advance is a temporary fix, not a solution. Once you take one, your priority is to pay it off as fast as possible. The longer you carry the balance, the more interest you pay, and the more expensive the advance becomes.
Frequently Asked Questions
Can I take a cash advance if I do not have a PIN?
No, ATMs require a PIN. If you do not have one, call your card issuer to request one, which usually takes a few business days. In the meantime, you can take a cash advance at a bank branch with your card and ID, or wait for a convenience check to arrive in the mail.
Does a cash advance hurt my credit score?
A cash advance itself does not hurt your score, but it increases your credit utilization — the percentage of your available credit you are using. High utilization can lower your score slightly. Paying off the advance quickly brings your utilization back down and minimizes the damage.
What happens if I cannot pay back a cash advance?
If you do not pay, the balance accrues interest and late fees, just like any credit card debt. Your issuer may report the missed payment to credit bureaus, which damages your credit score. If the debt goes unpaid long enough, the issuer may close your account or send the debt to a collection agency.
Can I use a cash advance to pay another credit card?
Technically yes, but it is almost never worth it. You pay the cash advance fee and interest rate on the money you use to pay off the other card. You end up paying more in fees and interest than if you had straightforward paid the other card with money you already had or made a regular payment plan.
Is there a difference between a cash advance and a balance transfer?
Yes. A balance transfer moves debt from one card to another and usually has a lower fee and APR. A cash advance borrows cash against your credit limit and has a higher fee and APR. Balance transfers are for moving existing debt; cash advances are for getting physical cash.