Yes, you can withdraw cash from a credit card, but it costs more than a regular purchase
A cash advance lets you borrow money against your credit card's available balance and withdraw it as cash from an ATM, bank teller, or convenience store. The transaction goes on your credit card bill like any other charge. But unlike a purchase, a cash advance starts charging interest when ready — there is no grace period — and the interest rate is usually higher than your regular purchase rate. You also pay an upfront fee, typically 3 to 5 percent of the amount withdrawn.
The mechanics are straightforward: you insert your card into an ATM, select "cash advance" or "withdrawal," enter the amount, and the money comes out. Some banks let you request cash advances at a teller window instead. The catch is that this convenience comes with real costs that add up quickly, especially if you carry the balance for more than a month or two.
Key Takeaways
- Cash advances charge interest from day one with no grace period, unlike purchases, and the interest rate is typically 2 to 5 percentage points higher than your purchase rate.
- You pay an upfront fee of 3 to 5 percent of the cash amount, charged when ready to your balance.
- The total cost of a $500 cash advance can easily reach $50 to $75 in fees and interest within the first month.
- Your credit card statement shows cash advances separately from purchases, and payments go toward purchases first, leaving the cash advance balance to accrue interest longer.
How much a cash advance actually costs
The fee structure has two parts: the upfront fee and the interest. The upfront fee is charged the moment you withdraw the cash and appears on your next statement. A $500 cash advance with a 4 percent fee costs $20 when ready. That $520 total then begins accruing interest at your cash advance rate.
Interest rates for cash advances vary by card and issuer, but they typically run 3 to 5 percentage points higher than your purchase rate. If your purchase rate is 18 percent, your cash advance rate might be 23 percent. On a $520 balance at 23 percent annual interest, you owe roughly $10 in interest after one month if you make no payment. After three months without a payment, interest alone reaches $30 to $40.
The math gets worse because of how payments are applied. When you make a payment on your credit card, the issuer applies it to your lowest-interest balance first — usually purchases — and leaves the cash advance balance untouched. This means your cash advance keeps accruing interest while you pay down purchases, extending the time the cash advance sits on your account.
Where you can get a cash advance
ATMs are the most common route. Any ATM that accepts your card's network (Visa, Mastercard, American Express, Discover) will let you request a cash advance, though ATMs owned by banks other than your card issuer often charge an additional ATM fee of $2 to $5 on top of the cash advance fee.
Bank tellers can also process cash advances at branches of your card issuer. This route avoids the extra ATM fee and sometimes gives you a chance to ask questions, but it requires visiting during business hours. Some convenience stores and check-cashing services offer cash advances too, though they typically charge their own fees on top of your card's fees.
The limit on how much you can withdraw is set by your card issuer and is usually lower than your total credit limit. Many issuers set a cash advance limit at 20 to 50 percent of your credit limit, and some cap it at a fixed dollar amount like $500 or $1,000. You can call your issuer to find out your specific limit.
Why cash advances are rarely the right choice
The combination of high fees and when ready interest makes cash advances expensive for almost any situation. If you need cash for an emergency, a personal loan from a bank or credit union typically charges less interest and no upfront fee. If you need cash for everyday expenses, a debit card withdrawal from your own account costs nothing.
Even a payday loan, which has a terrible reputation, often costs less than a cash advance if you repay it within two weeks. A $500 payday loan at a typical 400 percent annual rate costs about $38 in interest for two weeks — less than the $20 upfront fee plus interest on a cash advance.
The only scenario where a cash advance makes sense is if you have an when ready, unavoidable need for cash and no other option available, and you can repay it within days. Even then, the cost is high enough that you should exhaust other options first.
How a cash advance affects your credit score
A cash advance itself does not appear as a separate item on your credit report, but it does affect the numbers that determine your score. The withdrawal increases your credit utilization — the percentage of your available credit you are using — which can lower your score by a few points if you are already using a high percentage of your limit.
The bigger impact comes if you carry the cash advance balance and miss payments. Late payments and high balances both damage your score. Because cash advances accrue interest so quickly, they are straightforward to carry longer than you intended, which keeps your utilization high and your score under pressure.
Alternatives to a cash advance
If you need cash urgently, consider these options before using a cash advance. A personal loan from a bank, credit union, or online lender typically charges 6 to 36 percent interest with no upfront fee, making it cheaper than a cash advance even at the high end. The money usually arrives within one to three business days.
A balance transfer to a card with a 0 percent introductory rate can work if you have time to plan. You transfer the balance from your current card to a new card with a promotional period, usually 6 to 21 months, during which you pay no interest. You still pay a balance transfer fee of 3 to 5 percent, but you avoid the ongoing interest charges.
If you have a savings account, even a small one, withdrawing from savings costs nothing and does not create debt. If you have a 401(k) or similar retirement account, some plans allow loans against your balance at low interest rates, though this should be a last resort because it reduces your retirement savings.
A line of credit from your bank, if you have one, typically charges less interest than a cash advance and may have no upfront fee. Some employers offer paycheck advances or emergency loans to employees. Credit unions often offer small loans at lower rates than credit cards.
How to minimize damage if you do take a cash advance
If you have already taken a cash advance or are certain you must, these steps reduce the cost. First, repay it as fast as possible — every day you carry the balance costs you money in interest. Make a separate payment specifically toward the cash advance balance, not just a general payment to your card, because general payments go to purchases first.
Second, withdraw only what you absolutely need. A $200 cash advance costs less than a $500 one, even at the same rate. Third, check whether your card issuer offers any cash advance fee waivers for specific situations — some do for hardship cases, though this is rare.
Fourth, do not take a second cash advance to pay off the first one. This only multiplies the fees and extends the problem. If you find yourself in a cycle of cash advances, that is a sign you need a different solution, such as a personal loan or credit counseling.
Frequently Asked Questions
Can I use a credit card cash advance to pay another bill?
Yes, you can use the cash for any purpose. However, because the interest rate and fees are so high, using a cash advance to pay another bill usually costs more than paying the bill directly. If you cannot pay a bill with your regular income or savings, a personal loan or payment plan with the creditor is typically cheaper.
Does a cash advance show up differently on my credit report?
No, a cash advance does not appear as a separate line item on your credit report. It is part of your credit card balance and affects your credit utilization and payment history the same way a purchase does. However, if you miss payments on the cash advance, that late payment does show up and damages your score.
What is the difference between a cash advance and a balance transfer?
A cash advance withdraws money from your credit line and puts it in your pocket; a balance transfer moves debt from one card to another. Cash advances charge interest when ready with no grace period. Balance transfers often have a 0 percent introductory rate for 6 to 21 months, making them cheaper if you are moving existing debt, but they still charge an upfront fee.
Can I get a cash advance from a credit card I do not use?
Yes, as long as the card is active and has available credit, you can take a cash advance from it. However, doing so activates the card and may trigger interest charges and fees, so it makes sense only if the card has a lower cash advance rate than your other options.
What happens if I cannot repay a cash advance?
The balance stays on your credit card and continues accruing interest. If you miss payments, your credit score drops and the issuer may increase your interest rate or close the account. If the debt goes unpaid long enough, the issuer may sell it to a debt collector. Contact your issuer when ready if you cannot repay — some offer hardship programs that lower interest rates or pause fees temporarily.