You can pull cash from a credit card, but it costs more than a purchase and starts charging interest when ready
A cash advance is a withdrawal of cash from your credit card account, usually through an ATM, bank teller, or convenience store. Unlike a purchase, which goes on your bill and may have a grace period before interest kicks in, a cash advance begins accruing interest the moment you take it out. There is no grace period. You also pay an upfront fee — typically 3 to 5 percent of the amount withdrawn — on top of the interest rate, which is often higher than your regular purchase APR.
The mechanics are straightforward: you use your credit card at an ATM or visit a bank branch, enter your PIN, and withdraw cash up to your available credit limit (or a lower cash advance limit set by your card issuer). The money hits your account when ready. But the cost accumulates just as fast. If you need cash, a cash advance should be a last resort, not a convenience.
Key Takeaways
- Cash advances charge an upfront fee of 3 to 5 percent plus a higher interest rate than purchases, with no grace period.
- Your card issuer sets a separate cash advance limit, which may be lower than your total credit limit.
- Interest begins accruing the day you withdraw the cash, not at the end of your billing cycle.
- A $500 cash advance at 5 percent fee plus 25 percent APR costs you $25 upfront and roughly $10 per month in interest alone.
- Alternatives like a personal loan, payday loan, or borrowing from family usually cost less than a cash advance.
Where and how to take a cash advance
You can withdraw a cash advance from any ATM that displays your card's logo — Visa, Mastercard, American Express, or Discover. You insert your card, enter your PIN, and select the cash advance option if the ATM offers it (some ATMs only allow regular debit transactions). Banks and credit unions also allow cash advances at the teller window if you bring your card and ID. Some convenience stores and check-cashing services offer cash advances too, though they may charge an additional fee on top of your card issuer's fee.
The amount you can withdraw is limited by your cash advance limit, which your card issuer sets separately from your overall credit limit. This limit is often 20 to 50 percent of your total credit limit, though it varies by card and issuer. You can call your card issuer or log into your online account to find out your cash advance limit before you go to the ATM.
The fees and interest that make cash advances expensive
A cash advance costs you money in two ways: an upfront fee and a higher interest rate. The cash advance fee is typically 3 to 5 percent of the amount withdrawn, charged when ready. A $500 advance costs $15 to $25 in fees alone. Some cards cap the fee at a flat amount — for example, $10 minimum and $50 maximum — so a very small advance might cost $10, and a very large one might cost $50 regardless of the percentage.
The cash advance APR is almost always higher than your purchase APR. While a purchase might carry 18 percent interest, a cash advance could be 25 or 30 percent. And unlike a purchase, which may have a 21-day grace period before interest starts, a cash advance begins charging interest on day one. If you withdraw $500 at a 5 percent fee and 25 percent APR, you owe $25 when ready, plus roughly $10 in interest for the first month if you do not pay it back.
Interest is calculated daily on the outstanding balance. The longer you carry the cash advance, the more interest compounds. If you pay off the advance slowly, you could end up paying more in interest than the original fee.
How payments are applied when you carry both purchases and cash advances
If you have both a purchase balance and a cash advance balance on your card, your payment is applied to the lowest-interest debt first — usually your purchase balance. This means your cash advance (which carries the higher rate) keeps accruing interest while you pay down the cheaper debt. This is the opposite of what you might expect, and it makes carrying a cash advance even more costly.
To avoid this trap, pay off the cash advance as quickly as possible, ideally before your next statement closes. If you cannot pay it off in full, make a payment large enough to cover the cash advance balance first, then explore any remaining payment to purchases.
Alternatives that usually cost less than a cash advance
Before you take a cash advance, consider other ways to get cash. A personal loan from a bank or credit union typically charges 6 to 36 percent APR with no upfront fee, and you know the exact payment and timeline upfront. A payday loan costs more per dollar borrowed but is shorter-term (usually two weeks), so the total interest may be less if you repay quickly. Borrowing from family or friends costs nothing if they agree, though it carries its own risks to the relationship.
If you need cash for an emergency, a personal loan or a 0 percent balance transfer card (if you have good credit) will almost always be cheaper than a cash advance. Even a payday loan, despite its high APR, may cost less if you repay within a few weeks. A cash advance should only be your choice if every other option is truly closed to you.
Cash advances and your credit score
A cash advance does not directly hurt your credit score the way a missed payment does. However, it does increase your credit utilization — the percentage of your available credit you are using. If your cash advance pushes your utilization above 30 percent, it can lower your score slightly. The effect is temporary and reverses once you pay the balance down.
The bigger risk is that a cash advance can be a sign you are short on cash, which may lead to missed payments or higher balances overall. If you find yourself taking cash advances regularly, that is a signal to reassess your budget or look for additional income.
Frequently Asked Questions
Can I take a cash advance if I have not used my credit card yet?
Yes. A cash advance is a feature of your credit account, not a reward for past spending. You can take a cash advance the day you open the card, up to your cash advance limit. However, you will still pay the fee and interest when ready.
What happens if I take a cash advance and then lose my job?
You still owe the balance, and interest keeps accruing. If you cannot pay, contact your card issuer and ask about hardship programs — some offer temporary interest rate reductions or payment plans. Missing payments will damage your credit score and may result in collection action.
Is a cash advance the same as a balance transfer?
No. A balance transfer moves debt from one card to another (usually at a lower rate for a promotional period). A cash advance is cash withdrawn from your card account. Balance transfers have their own fees and terms, but they are not the same transaction.
Can I take a cash advance from a secured credit card?
Yes, most secured cards allow cash advances, though the limit may be lower than on unsecured cards. The fees and interest rates are the same. Check your card agreement or call your issuer to confirm your cash advance limit.
What if an ATM charges its own fee on top of my card issuer's fee?
Some ATMs charge a surcharge (usually $2 to $3) for using an out-of-network machine. This is separate from your card issuer's cash advance fee. You pay both. To avoid the surcharge, use an ATM owned by your card issuer's bank or a bank in their network.