You can withdraw cash from a credit card, but it costs more than a regular purchase
A cash advance is a withdrawal of cash from your credit card account. The card issuer treats it like a loan against your credit limit, not a purchase. You pay interest on the amount when ready — there is no grace period like there is for regular purchases — and you also pay an upfront fee, usually 3 to 5 percent of the amount you withdraw.
You can get a cash advance at an ATM using your credit card and PIN, at a bank teller window, or through a cash advance check that your card issuer mails to you. The process is straightforward, but the cost is high enough that you should only use it when you have no other option.
Key Takeaways
- Cash advances charge interest starting when ready, with no grace period, plus an upfront fee of 3 to 5 percent of the amount withdrawn.
- You can withdraw cash at an ATM with your credit card and PIN, at a bank branch, or by depositing a cash advance check.
- The interest rate on a cash advance is usually higher than the rate on regular purchases, sometimes 5 to 10 percentage points higher.
- If you need cash, a debit card, personal loan, or credit card balance transfer are usually cheaper options than a cash advance.
Withdraw cash at an ATM with your credit card
The fastest way to get cash is to use an ATM. Insert your credit card into the machine, enter your PIN, select "cash advance" or "withdrawal," and choose the amount. The ATM will dispense the cash and charge it to your credit card account.
Not all ATMs accept credit cards — most are set up for debit cards only. Your card issuer's own ATMs are most likely to work. If you are not sure whether an ATM will accept your card, call the number on the back of your card and ask which ATM networks your issuer uses.
ATMs that are not owned by your card issuer may charge an additional fee on top of the cash advance fee. A third-party ATM might charge $2 to $5 just to use the machine, plus your card issuer's cash advance fee.
Get cash at a bank branch
You can also walk into any bank branch and ask the teller for a cash advance on your credit card. Bring your card and a form of ID. The teller will process the transaction and hand you cash.
This method avoids ATM fees, but it only works during business hours and you need a branch nearby. If your card issuer has physical locations, their branches will not charge an extra fee. Other banks may charge you a fee to process the advance.
Use a cash advance check
Many credit card issuers mail cash advance checks to cardholders. These are blank checks drawn on your credit card account. You can deposit them into your bank account or cash them at a bank or check-cashing service.
The advantage is that you can deposit the check into your checking account and use the money however you want. The disadvantage is that it takes several days for the check to clear, so this is not a fast option if you need cash right away.
Cash advance checks usually come with the same fee and interest rate as ATM withdrawals. Check the terms in the letter that came with the checks to confirm.
Understand the costs of a cash advance
A cash advance has three costs: the upfront fee, the interest rate, and the lack of a grace period.
The upfront fee is usually 3 to 5 percent of the amount you withdraw. If you withdraw $500, you might pay $15 to $25 just to get the cash. Some card issuers set a minimum fee (for example, $5) so that very small withdrawals do not cost less than a few dollars.
The interest rate on a cash advance is usually higher than the rate on regular purchases. If your card charges 18 percent APR on purchases, the cash advance rate might be 23 or 25 percent. Interest starts accruing the day you withdraw the cash — there is no grace period.
If you withdraw $500 at 25 percent APR and pay it back in one month, you will owe about $10 in interest, plus the upfront fee. Over a year, the cost becomes much larger.
Compare cash advances to other ways to get cash
Before you use a cash advance, consider whether another option costs less.
A debit card withdrawal costs nothing if you use your own bank's ATM. If you do not have a debit card, you can open a checking account at most banks in a few minutes.
A personal loan from a bank or credit union usually charges 6 to 36 percent APR, depending on your credit score and the lender. The interest rate is lower than a cash advance, and you pay no upfront fee. The downside is that approval takes a few days.
A balance transfer from one credit card to another can move money into your bank account. Some cards offer 0 percent APR on balance transfers for 6 to 21 months, though they charge a 3 to 5 percent upfront fee. This is cheaper than a cash advance if you can pay back the balance before the promotional rate ends.
A credit card purchase of a gift card or prepaid card, followed by a withdrawal at an ATM, is sometimes cheaper than a direct cash advance, but this varies by card and retailer. Ask your card issuer whether this option is available to you.
Pay back a cash advance as fast as you can
Interest on a cash advance accrues every single day. The longer you carry the balance, the more you pay.
When you make a payment on your credit card, the payment goes toward the lowest-interest debt first — usually regular purchases. Cash advance balances sit at the bottom of the payment queue. This means that if you have both a purchase balance and a cash advance balance, your payment will pay off the purchase first, and the cash advance will keep accruing interest.
To pay off a cash advance faster, contact your card issuer and ask whether you can make a payment that goes directly toward the cash advance balance. Some issuers allow this; others do not. If they do not, you will need to pay off all other balances first before the cash advance balance starts to shrink.
Frequently Asked Questions
Can I withdraw more cash than my credit limit?
No. A cash advance counts against your credit limit, just like a purchase does. If your limit is $5,000 and you have already charged $3,000, you can only withdraw up to $2,000 in cash advances.
Does a cash advance hurt my credit score?
A cash advance itself does not hurt your score, but carrying a high balance does. If the cash advance pushes your total balance close to your credit limit, your credit utilization ratio goes up, which can lower your score. Paying it back quickly will bring your score back up.
What is the difference between a cash advance and a balance transfer?
A cash advance gives you cash in hand and charges a high interest rate when ready. A balance transfer moves money from one credit card to another and often offers a lower promotional rate for a set period. Balance transfers are usually cheaper if you need to carry a balance, but they do not give you cash.
Can I use a credit card cash advance to pay off another debt?
Yes, you can withdraw cash and use it to pay any bill or debt. However, the high fees and interest rate make this an expensive way to borrow. A personal loan or balance transfer is usually cheaper.
What happens if I do not pay back a cash advance?
The balance will keep accruing interest at your cash advance rate, and your credit card issuer may report the missed payment to credit bureaus. This will damage your credit score and may lead to collection action.