A cash advance is when you borrow money directly from your credit card issuer, usually at an ATM or bank branch
A cash advance is a short-term loan against your credit card's available balance. Instead of using your card to buy something, you withdraw actual cash — either from an ATM using a PIN, at a bank teller window, or sometimes through a convenience check the card issuer sends you. The money appears in your bank account or your hand within minutes or hours, but the debt goes straight onto your credit card balance, just like a purchase would.
The catch is that cash advances cost significantly more than regular purchases. You pay an upfront fee (usually 3 to 5 percent of the amount withdrawn), interest starts accruing when ready with no grace period, and the interest rate is often higher than your card's regular purchase rate. If you need cash urgently, a cash advance works. If you have other options, they are almost always cheaper.
Key Takeaways
- Cash advances charge an upfront fee of 3 to 5 percent plus a higher interest rate than purchases, with interest starting when ready.
- You can withdraw cash at ATMs, bank branches, or through convenience checks, but the amount is limited by your card issuer and your available credit.
- Interest on a cash advance does not have a grace period, so charges begin the day you withdraw the money.
- Payments toward a cash advance are applied last, after purchases, so carrying a balance means your purchases stay charged interest longer.
How to get a cash advance from your credit card
The process depends on which method you choose. At an ATM, insert your card, enter your PIN (which you may need to set up first if you have never used it), select "cash advance" or "withdrawal," and enter the amount. The ATM will show you the fee before you confirm. At a bank branch, give the teller your card and ask for a cash advance; they will verify your identity and process it on the spot.
Some card issuers mail convenience checks that work like regular checks but draw from your credit line instead of a bank account. You write the check to yourself or a payee, deposit or cash it, and the amount becomes a cash advance on your card. Check the envelope for the fee and terms before using one.
Your card issuer sets a cash advance limit, which may be lower than your total credit limit. Call the number on the back of your card or log into your online account to find out what you can withdraw. The limit depends on your credit history, account age, and payment record.
Fees and interest rates for cash advances
Cash advances have three separate costs. The cash advance fee is charged upfront and is typically 3 to 5 percent of the amount you withdraw — so a $500 advance costs $15 to $25 before you even use the money. This fee appears on your next statement.
The interest rate on a cash advance is usually 2 to 5 percentage points higher than your regular purchase rate. If your card charges 18 percent APR on purchases, the cash advance rate might be 23 percent. This rate varies by card issuer and your creditworthiness, so check your card agreement or call your issuer to find the exact rate.
Unlike purchases, interest starts accruing when ready — there is no grace period. A purchase made on day one of your billing cycle may not charge interest until the end of the cycle if you pay in full. A cash advance on day one charges interest on day one. This compounds daily, so the longer you carry the balance, the more you pay.
How cash advances affect your credit and payments
A cash advance does not hurt your credit score directly, but it does increase your credit utilization — the percentage of your available credit you are using. If you have a $5,000 limit and take a $1,000 advance, your utilization jumps to 20 percent. High utilization can lower your score slightly, and the effect is temporary once you pay the balance down.
When you make a payment toward your credit card balance, the payment is applied in a specific order set by law: first to the highest-rate balance (usually the cash advance), then to other balances. However, interest is calculated separately on each type of balance, so carrying both a cash advance and purchases means you pay interest on both until both are paid off. This makes cash advances expensive to carry month to month.
If you only take a cash advance and pay it off in full before the next statement closes, you avoid the interest charge but still pay the upfront fee. There is no way around the fee.
When a cash advance makes sense
A cash advance is useful when you need physical cash and have no other way to get it. Examples include paying a contractor who does not take cards, covering an unexpected cash-only expense, or withdrawing money while traveling in a place where your debit card does not work. In these situations, the fee and interest are the cost of solving an when ready problem.
A cash advance does not make sense for everyday spending, paying bills online, or covering a shortfall you could address another way. A personal loan, a payday loan (despite its own high costs), or borrowing from family are often cheaper. Even a balance transfer to a 0 percent introductory card costs less than a cash advance if you have time to explore.
Alternatives to a credit card cash advance
If you need cash but want to avoid the high fees and when ready interest, consider these options. A balance transfer to a card offering 0 percent APR for a set period (usually 6 to 21 months) lets you move debt at a lower cost, though you pay a transfer fee of 3 to 5 percent. A personal loan from a bank or credit union typically charges less interest than a cash advance and gives you a fixed repayment schedule. A payday loan is expensive but may cost less than a cash advance if you repay it within two weeks.
If you have a debit card, using an ATM to withdraw from your bank account costs nothing and is always the cheapest option. If you do not have a bank account, a prepaid card or a check-cashing service may be cheaper than a cash advance, depending on the amount and your location.
How to minimize the cost of a cash advance
If you must take a cash advance, keep the amount as small as possible and pay it back as fast as you can. Every day you carry the balance, interest accrues. Paying off a $500 advance in one week costs far less than paying it off in a month.
Before you withdraw, confirm the exact fee and interest rate with your card issuer. Some cards charge a flat fee (like $10) instead of a percentage, which may be cheaper for small amounts. Know your cash advance limit so you do not attempt a withdrawal that will be declined.
After you pay off the advance, do not take another one unless absolutely necessary. The fees and interest add up quickly, and repeated cash advances signal financial stress that can affect your credit over time.
Frequently Asked Questions
Can I use a credit card cash advance to pay another credit card bill?
Technically yes, but it is expensive and usually a sign you need help with debt. You pay the cash advance fee and interest rate on the amount, then use that cash to pay another card. You end up paying more in fees and interest than if you had straightforward transferred the balance or worked out a payment plan with the card issuer.
Does a cash advance show up differently on my credit report?
No. A cash advance appears on your credit card statement and counts toward your balance, but it does not show as a separate type of debt on your credit report. However, the higher balance and utilization can affect your credit score temporarily.
What happens if I cannot pay back a cash advance?
The balance stays on your card and interest continues to accrue. If you miss payments, your card issuer may charge late fees, increase your interest rate, and report the missed payment to credit bureaus, which damages your credit score. Contact your card issuer to discuss payment options before you fall behind.
Is there a way to avoid the cash advance fee?
No. The fee is mandatory and appears on every cash advance, regardless of how quickly you repay it. The only way to avoid it is to not take a cash advance.
Can I take a cash advance from multiple credit cards?
Yes, but each advance charges its own fee and interest rate. Taking advances from multiple cards to cover expenses is a sign of financial strain and makes debt harder to manage. If you are considering this, speaking with a nonprofit credit counselor may help you find a better path forward.