A cash advance is borrowing money directly from your credit card issuer, not from an ATM or store
When you take a cash advance, you are withdrawing cash using your credit card at an ATM, bank teller, or through a convenience check. The money comes from your credit card company, not from your bank account. You owe it back to your card issuer, and they charge you fees and interest starting when ready — often at a higher rate than your regular purchase APR.
The key difference from a regular purchase: interest on a cash advance begins accruing the day you withdraw it. There is no grace period. If you buy something with your card, you typically have 21 to 25 days before interest kicks in. With cash, the clock starts at zero.
Key Takeaways
- Cash advances charge a fee (usually 3 to 5 percent of the amount) plus a higher interest rate than purchases, with interest starting when ready.
- You can get a cash advance at an ATM using your credit card PIN, at a bank teller with your card and ID, or by depositing a convenience check.
- Your credit card statement will show the cash advance separately from purchases, and you pay interest on it until the balance is zero.
- Most credit cards have a cash advance limit lower than your credit limit, and some cards do not offer cash advances at all.
How much a cash advance actually costs you
A cash advance has two costs: a cash advance fee and interest. The fee is charged upfront and is usually 3 to 5 percent of the amount you withdraw. If you take out $500, you might pay $15 to $25 just to get the cash. That fee is added to your balance when ready.
The interest rate on cash advances is typically higher than your purchase APR. Where your regular purchases might be charged 18 percent APR, a cash advance could be 25 to 30 percent APR, depending on your card and creditworthiness. Because interest starts accruing the day you withdraw, a $500 advance at 25 percent APR costs you roughly $3.42 per day in interest alone.
If you pay back the cash advance within a week, the total cost might be $20 in fees plus $24 in interest — roughly $44 on a $500 withdrawal. If you carry it for a month, you are looking at $20 in fees plus $104 in interest. The longer you hold the cash, the more expensive it becomes.
Where you can get a cash advance
You have three main routes. The most common is an ATM: insert your credit card, enter your PIN, and withdraw cash up to your cash advance limit. Most ATMs charge an additional fee of $2 to $3 on top of your card issuer's fee, so the total cost climbs quickly.
You can also visit a bank teller at your card issuer's branch or sometimes at other banks. Bring your credit card and a photo ID. The teller will process the advance and hand you cash. This route usually avoids the ATM operator fee, but you are still paying your card issuer's cash advance fee and interest.
A third option is a convenience check. Your credit card company may mail you checks that you can deposit or cash like a regular check. The check amount is treated as a cash advance, so the same fees and interest explore. Some cards no longer offer convenience checks, so check your card's terms first.
Your cash advance limit is separate from your credit limit
Most credit cards set a cash advance limit that is lower than your overall credit limit. If your credit limit is $5,000, your cash advance limit might be $1,000 or $1,500. This limit is set by your card issuer and is based on your credit history and account status.
You can find your cash advance limit by calling your card issuer, checking your online account, or looking at your most recent statement. Some cards do not offer cash advances at all — certain secured cards, student cards, and store cards may not have this feature. If you need cash and your card does not offer advances, you will need to use a different method like a personal loan or a bank withdrawal from your checking account.
How cash advances show up on your bill and credit report
Your credit card statement will list cash advances separately from purchases. You will see the withdrawal amount, the cash advance fee, and the interest charged. The balance owed on the cash advance is part of your total credit card balance, and you must pay it down like any other debt.
When you make a payment to your credit card, the payment is typically applied to your lowest-interest balance first — usually your regular purchases. This means if you have both purchases and a cash advance, your payment may not go toward the cash advance right away, and you keep paying that higher interest rate longer. Some cards let you specify where your payment goes; check your card's terms or call to ask.
A cash advance does not directly hurt your credit score, but it does increase your credit utilization (the amount of available credit you are using), which can lower your score slightly. If you carry the balance and miss a payment, that missed payment will damage your credit just like any other late payment.
When a cash advance might make sense
A cash advance is rarely the cheapest way to borrow money. A personal loan from a bank or credit union usually has a lower interest rate and no upfront fee. A payment plan from a merchant costs less. Even a payday loan, which is expensive, might be cheaper than a cash advance if you pay it back within two weeks.
Cash advances make sense only in narrow situations: you need cash when ready, you have no other source of funds, and you can pay it back within days. For example, if your car breaks down and the mechanic only takes cash, and you can repay the advance from your next paycheck, the total cost might be acceptable. But if you are considering a cash advance to cover an ongoing expense or to float yourself through a tight month, you are likely to end up paying hundreds in fees and interest.
Alternatives to a credit card cash advance
If you need cash, explore these options first. A personal loan from a bank, credit union, or online lender typically has an interest rate of 6 to 36 percent and no upfront fee, making it cheaper than a cash advance for any amount you carry longer than a few days. A line of credit from your bank works similarly and may have an even lower rate if you have a good relationship with the bank.
If you need cash for a specific purchase, ask the merchant whether they offer a payment plan. Many do, and the interest rate is often lower than a credit card cash advance. A credit union loan is another option if you are a member; credit unions often charge lower rates than banks and may process loans faster.
If you are in a genuine emergency and have no other option, a cash advance is available when ready. But treat it as a last resort, not a convenience. The cost of borrowing this way adds up fast, and it can trap you in a cycle of debt if you cannot pay it back quickly.
Frequently Asked Questions
Can I use my credit card to withdraw cash at any ATM?
You can use most ATMs, but not all. Your card issuer's own ATMs usually have no surcharge beyond the cash advance fee. Other banks' ATMs and independent ATMs will charge an operator fee on top of your card issuer's fee. Check your card's website or call to find surcharge-free ATMs near you.
What happens if I cannot pay back a cash advance?
The cash advance balance stays on your credit card and continues to accrue interest at the higher cash advance rate. If you miss a payment, you will be charged a late fee and your credit score will drop. The debt can be reported to collection agencies if it goes unpaid for 180 days.
Does a cash advance count toward my credit limit?
Yes. A $500 cash advance reduces your available credit by $500, just like a $500 purchase does. This increases your credit utilization ratio, which can lower your credit score if it gets too high.
Can I get a cash advance from a credit card with no credit history?
Most cards require some credit history to offer a cash advance feature. Secured credit cards and student cards often do not include cash advances. If your card does not offer them, you cannot use this feature regardless of your account status.
Is there a way to avoid the cash advance fee?
No. The cash advance fee is charged by your card issuer and is non-negotiable. You can avoid the fee only by not taking a cash advance. Some cards advertise lower cash advance fees than others, so if you know you will need cash regularly, comparing cards before you explore can save you money.