Yes, you can take money out of a credit card, but it works differently than a debit card withdrawal and costs more
A cash advance is when you use your credit card to pull cash from an ATM, bank teller, or convenience store. The money goes into your pocket when ready, but the credit card company charges you a fee upfront — usually 3 to 5 percent of the amount — plus a higher interest rate than regular purchases, often 20 to 30 percent. That interest starts accruing the same day you withdraw the cash, with no grace period like you get on regular credit card purchases.
The practical result: a $300 cash advance can cost you $9 to $15 just to take it out, then another $5 to $15 in interest charges over the first month if you don't pay it back when ready. This makes cash advances one of the most expensive ways to borrow money, even compared to payday loans or credit card purchases.
Key Takeaways
- Cash advances charge an upfront fee of 3 to 5 percent plus a much higher interest rate than regular purchases, with no grace period before interest starts.
- You can withdraw cash at an ATM using your credit card PIN, at a bank teller with your card and ID, or sometimes at a convenience store, but each method has different fees.
- The interest on a cash advance begins the day you withdraw it, so even a small amount costs money if you carry it for more than a few days.
- If you need cash urgently, a personal loan, paycheck advance from your employer, or a line of credit from your bank are usually cheaper than a credit card cash advance.
How a cash advance actually works step by step
When you request a cash advance, the credit card company treats it as a separate transaction from your regular purchases. You have a cash advance limit — often lower than your total credit limit — that the company sets based on your credit history. If your credit limit is $5,000, your cash advance limit might be $1,500.
The moment you withdraw the cash, three things happen: the amount counts against your cash advance limit, the upfront fee is added to your balance, and the interest clock starts. Unlike a regular purchase, which has a grace period (usually 21 to 25 days before interest kicks in), cash advance interest begins when ready. This means a $300 withdrawal with a 4 percent fee costs you $12 right away, plus interest that compounds daily at your card's cash advance rate.
The cash advance appears on your credit card statement as a separate line item from your regular purchases. When you make a payment, the credit card company applies it to whichever balance has the highest interest rate first — usually the cash advance — but you need to pay enough to cover both the advance and any regular purchases you've made.
Where you can withdraw cash and what each method costs
You have three main ways to get cash from a credit card, and the fees vary by method and by card issuer.
ATM withdrawal: Insert your card and enter your PIN to withdraw cash. Most credit card companies charge a flat fee ($2 to $5) plus a percentage of the amount (1 to 3 percent). The ATM operator may also charge an additional fee ($1 to $3) if it's not their bank's ATM. A $300 withdrawal at an out-of-network ATM can cost $10 to $15 in fees alone.
Bank teller withdrawal: Walk into a bank branch with your credit card and ID, and ask for a cash advance. The bank charges the credit card company's fee, which is usually lower than an ATM fee — often a flat $5 to $10 or a percentage, but not both. This is usually the cheapest method if your bank has a branch nearby.
Convenience store or check-cashing service: Some places offer cash advances at the register, but they typically charge the highest fees — sometimes 5 to 10 percent of the amount plus a flat fee. Avoid this method unless you have no other option.
Why the interest rate on cash advances is so much higher
Credit card companies charge a different interest rate for cash advances than for regular purchases because they see cash as riskier. When you buy something with a credit card, the merchant guarantees the transaction and the card company can dispute it if something goes wrong. When you withdraw cash, there's no merchant, no may provide, and no way to dispute the transaction — you either have the cash or you don't.
Your card's regular purchase rate might be 18 percent, but the cash advance rate is often 25 to 30 percent. This higher rate applies only to the cash advance balance, not to regular purchases. If you carry a cash advance balance for a month, you'll pay roughly double the interest you'd pay on a regular purchase of the same amount.
The lack of a grace period makes this worse. On a regular purchase, you have about three weeks before interest starts. On a cash advance, interest starts the day you withdraw it. This means even if you pay back the cash advance within a week, you'll still owe interest for those seven days.
What happens if you can't pay back the cash advance quickly
If you carry a cash advance balance beyond the first month, the interest compounds and becomes expensive fast. A $500 cash advance at 25 percent interest costs about $10 in interest the first month. If you only make minimum payments and carry it for six months, you'll pay roughly $65 in interest alone, plus the original upfront fee.
The cash advance also affects your credit utilization — the percentage of your available credit you're using. If you have a $5,000 credit limit and a $1,500 cash advance limit, a $500 cash advance uses up one-third of your cash advance limit and one-tenth of your total limit. High utilization can lower your credit score, which makes future borrowing more expensive.
If you miss a payment on the cash advance, it's treated like any other credit card debt: it gets reported to the credit bureaus, damages your credit score, and can lead to late fees and collections action. The credit card company can also raise your interest rate on all balances if you miss a payment.
Cheaper ways to get cash when you need it
Before you use a cash advance, consider these alternatives that usually cost less.
Personal loan from a bank or credit union: If you have time to wait a few days, a personal loan typically charges 6 to 36 percent interest depending on your credit score — lower than a cash advance rate. There's no upfront fee, and interest doesn't start until you receive the money. A $500 personal loan at 15 percent costs about $6 in interest per month, compared to $10 to $15 for a cash advance.
Paycheck advance from your employer: Some employers offer paycheck advances or emergency loans to employees at no interest. Ask your HR or payroll department whether this is an option. This is usually the cheapest way to borrow if it's available to you.
Line of credit from your bank: If you have a checking or savings account, your bank may offer a small line of credit at a lower rate than a cash advance. These are often easier to set up than a personal loan and have lower fees.
Borrow from family or friends: If possible, borrowing from someone you know avoids fees and interest entirely. Put the agreement in writing so there's no confusion later.
Sell something or pick up extra work: If you have time, selling items you no longer need or taking on a short-term gig avoids borrowing altogether.
How to avoid needing a cash advance in the first place
The best way to handle cash advances is to not use them. This means building a small emergency fund — even $500 to $1,000 — so you have cash available when something unexpected happens. Keep this money in a savings account separate from your checking account, so you're less tempted to spend it.
If you find yourself needing cash advances regularly, it's a sign that your expenses are higher than your income. This is the moment to look at your budget: what's taking up the most money, and what can you cut or reduce? A credit counselor can walk through this with you for free through a nonprofit credit counseling agency.
If you've already taken out a cash advance and are carrying a balance, focus on paying it off as fast as possible. Every dollar you pay toward the cash advance saves you money in interest. Once it's gone, redirect that money toward building an emergency fund so you don't need another one.
Frequently Asked Questions
Can I use a credit card to withdraw cash at any ATM?
Yes, but you'll need your PIN. If you don't have one, call your credit card company and request one. You can withdraw cash at any ATM, but out-of-network ATMs charge higher fees. Your card issuer's website usually shows which ATMs are in their network.
What's the difference between a cash advance and a balance transfer?
A cash advance gives you physical cash and charges high fees and interest when ready. A balance transfer moves debt from one card to another and often has a lower introductory rate for a set period. Balance transfers are for moving existing debt; cash advances are for getting cash.
Will a cash advance hurt my credit score?
Yes, in two ways. First, it increases your credit utilization, which can lower your score when ready. Second, if you carry the balance and make late payments, it damages your score further. The impact is temporary if you pay it off quickly.
Can I take a cash advance and then dispute it with my credit card company?
No. Unlike purchases, cash advances cannot be disputed. Once you have the cash, the transaction is final. This is one reason credit card companies charge higher fees and interest on cash advances.
What if I can't afford to pay back the cash advance?
Contact your credit card company and ask about a hardship program. Many companies offer temporary interest rate reductions or payment plans if you're struggling. The sooner you call, the more options you'll have. Ignoring the debt will damage your credit and lead to collection calls.