Taking cash out of a credit card costs more than you think
You can withdraw cash from a credit card at an ATM, but the moment you do, your card issuer charges you a cash advance fee — usually 3% to 5% of the amount withdrawn — plus a higher interest rate than your regular purchase rate. That interest starts accruing when ready, with no grace period. A $500 cash advance at 5% fee plus 24% APR costs you $25 upfront and roughly $10 per month in interest alone. The total cost of borrowing $500 for six months can easily exceed $50.
Most people who need cash have cheaper options. A personal loan from a bank or credit union, a balance transfer to a 0% card, or even a payday loan from a licensed lender will cost less than a credit card cash advance. This guide explains how the process works, what it costs, and when it might make sense — though in most cases it should not be your first choice.
Key Takeaways
- Cash advances charge a separate fee (3% to 5%) plus a higher interest rate than purchases, with interest starting when ready.
- You withdraw cash at an ATM using your credit card's PIN, which you may need to set up first by calling your card issuer.
- Your credit card company sets a cash advance limit, which is often lower than your total credit limit and appears on your statement.
- Personal loans, balance transfers, and even payday loans typically cost less than credit card cash advances.
- Cash advances do not count toward rewards or cash back and can lower your credit score by increasing your credit utilization ratio.
How to withdraw cash at an ATM
To take cash out of your credit card, you need a PIN. If you do not have one, call the customer service number on the back of your card and request a PIN for cash advances. The issuer will either give you one over the phone or mail it to you. Once you have it, go to any ATM that accepts your card's network — Visa, Mastercard, American Express, or Discover.
Insert your card, enter your PIN, select "Withdrawal" or "Cash Advance," and choose the amount. The ATM will dispense the cash and charge your credit card account when ready. Some ATMs charge an additional fee (often $2 to $5) on top of your card issuer's cash advance fee. Check the ATM screen before confirming — it will tell you the total fee before you complete the transaction.
You can also get a cash advance over the counter at a bank branch or through a convenience check mailed by your card issuer. Convenience checks work like regular checks but draw from your credit card account instead of a bank account. They carry the same fees and interest rates as ATM withdrawals.
What your credit card company charges
Every credit card issuer sets its own cash advance fee and interest rate. The fee is typically a flat percentage of the amount withdrawn — 3%, 4%, or 5% — with a minimum charge (often $5 to $10). So a $100 withdrawal might cost $5 (the minimum), while a $500 withdrawal costs $25 (5% of $500).
The interest rate for cash advances is separate from your purchase APR and is usually 5 to 10 percentage points higher. If your purchase rate is 18%, your cash advance rate might be 24% or 26%. Interest accrues daily from the moment you withdraw the cash — there is no grace period like there is for purchases. This means interest starts building before your statement even arrives.
Your card issuer also sets a cash advance limit, which is often 20% to 50% of your total credit limit. If your credit limit is $5,000, you might only be able to withdraw $1,000 in cash. This limit appears in your online account or on your statement. You can call your issuer to ask for a higher limit, but they are not required to grant it.
The real cost of a cash advance
A $500 cash advance at a typical 5% fee and 24% APR costs $25 upfront. If you pay it back in full within one month, your total cost is roughly $35 (the $25 fee plus one month of interest). If you carry the balance for six months, you will pay approximately $60 in interest alone, plus the original $25 fee, for a total cost of $85 on a $500 withdrawal.
Compare this to a personal loan from a bank or credit union. A $500 personal loan at 12% APR over six months costs roughly $40 in total interest — half the cost of the cash advance. A balance transfer to a 0% introductory card (if you may have access to) costs nothing for 6 to 21 months, depending on the offer. Even a payday loan, which has a bad reputation, typically costs $15 to $20 per $100 borrowed — less than a credit card cash advance when you factor in the fee plus interest.
Cash advances also do not earn rewards or cash back, even if your card normally does. And they increase your credit utilization ratio — the percentage of your available credit you are using — which can lower your credit score by 10 to 50 points, depending on how much you withdraw and how much available credit you have.
When a cash advance might make sense
A cash advance is rarely the right choice, but there are narrow situations where it might be the fastest option. If you need cash urgently and have no other way to get it — no access to a personal loan, no time to wait for a balance transfer, and no friends or family who can help — a cash advance gets you money in minutes. The cost is high, but sometimes speed matters more than cost.
Another scenario is if you have a very low credit limit on your cash advance but a high credit limit overall, and you only need a small amount. A $50 cash advance with a $5 minimum fee costs $5 upfront plus a few dollars in interest — not ideal, but manageable if it is truly a one-time emergency.
In most other cases, you should explore alternatives first. A personal loan takes a few days to a week but costs half as much. A balance transfer takes a few weeks but costs nothing for months. Even waiting a day or two to borrow from someone else is usually cheaper than a cash advance.
Alternatives that cost less
A personal loan from a bank, credit union, or online lender typically charges 6% to 36% APR, depending on your credit score and the lender. For a $500 loan at 15% APR over six months, you pay roughly $40 in interest — less than half the cost of a cash advance. The downside is that approval takes a few days to a week. Credit unions often approve faster than banks and charge lower rates if you are a member.
A balance transfer to a 0% introductory card is free for 6 to 21 months, depending on the card and your credit score. After the introductory period ends, a standard balance transfer fee (3% to 5%) applies to any remaining balance. This works only if you have time to wait for the new card to arrive and you may have access to for the offer. It is the cheapest option if you can carry the balance interest-free long enough to pay it down.
A payday loan from a licensed lender charges a flat fee per $100 borrowed — typically $15 to $20 — due in full when you get your next paycheck. A $500 payday loan costs $75 to $100 upfront. This is still expensive, but it is a one-time fee rather than ongoing interest, and it is faster than a personal loan. Avoid payday lenders that do not disclose their fees upfront or that pressure you to roll over the loan.
Borrowing from friends or family is free but can damage relationships. If you go this route, put the agreement in writing and set a repayment date. A 401(k) loan is another option if you have a retirement account — you borrow from yourself at a low interest rate, but you risk missing out on investment growth and may owe taxes if you leave your job before repaying.
How cash advances affect your credit
A cash advance does not directly hurt your credit score, but it can indirectly. When you withdraw cash, your credit utilization ratio increases — the percentage of your available credit you are using. If you have a $5,000 credit limit and withdraw $500, your utilization jumps from 0% to 10%. Credit scoring models treat high utilization as a sign of financial stress, and your score can drop 10 to 50 points depending on how much you withdraw and how much available credit you have.
The bigger hit comes if you carry the cash advance balance and miss a payment. Late payments stay on your credit report for seven years and can lower your score by 100 points or more. If you do take a cash advance, pay it back as quickly as possible to minimize interest and keep your utilization low.
Cash advances also do not help your credit in any positive way. They do not earn rewards, they do not show responsible credit use, and they do not build credit history the way a regular purchase or a personal loan does. From a credit-building perspective, they are neutral at best and harmful at worst.
Frequently Asked Questions
Can I use a credit card to get cash at a store checkout?
Yes, many stores allow you to request cash back when you make a purchase. However, this is still a cash advance and carries the same fee and interest rate as an ATM withdrawal. The only difference is that you are buying something at the same time. If you do not need the item, it is cheaper to use an ATM or go to a bank.
What happens if I cannot pay back the cash advance?
The balance stays on your credit card and accrues interest at your cash advance rate (usually 24% or higher). If you miss a payment, your card issuer reports it to credit bureaus, your score drops, and you may face late fees and collection calls. After 180 days of missed payments, the account may be charged off and sold to a debt collector.
Is there a way to avoid the cash advance fee?
No. Every credit card issuer charges a cash advance fee, and it is non-negotiable. You can call and ask, but they will not waive it. The only way to avoid the fee is to not take a cash advance and use a cheaper alternative instead.
Does taking a cash advance lower my credit score when ready?
Not when ready, but within a few days. Your card issuer reports the new balance to credit bureaus, which recalculate your utilization ratio. Your score may drop 10 to 50 points depending on how much you withdrew. The drop is temporary — your score will recover once you pay down the balance.
Can I take a cash advance on a debit card?
No. Debit cards draw directly from your bank account and do not allow cash advances. If you need cash and do not have a credit card, a personal loan or payday loan from a licensed lender is a better option than a credit card cash advance anyway.