You can take money out of a credit card, but it costs more than a regular purchase
A cash advance lets you withdraw money from your credit card at an ATM or bank, just like a debit card. The catch: you pay a fee upfront (usually 3 to 5 percent of the amount), plus a higher interest rate than you would on a purchase (often 20 to 30 percent). Interest starts accruing when ready — there is no grace period like there is for regular purchases. If you need cash urgently, a cash advance works, but it is expensive.
A balance transfer is different: you move debt from one credit card to another, usually one offering a lower interest rate for a set period. This does not put cash in your hand, but it can save you money if you are paying interest on an existing balance. Balance transfers also charge a fee, typically 3 to 5 percent, but the lower rate can make sense if you plan to pay down the debt quickly.
Both options use your credit card's available credit, so they count against your credit limit and can affect your credit score. The decision between them depends on whether you need actual cash or just want to reduce what you owe.
Key Takeaways
- Cash advances charge a fee of 3 to 5 percent plus a higher interest rate that begins when ready, making them expensive for short-term cash needs.
- Balance transfers move debt to a lower-rate card and charge a one-time fee, but they do not give you cash — they reduce what you owe.
- Both options reduce your available credit and can lower your credit score if they push your credit utilization above 30 percent.
- Cash advances are available at ATMs and bank tellers, but the interest and fees make them a last resort, not a regular source of cash.
How cash advances work and what they cost
To take a cash advance, you visit an ATM that accepts your card, go to a bank teller, or use a convenience check your card issuer sends you. The money appears in your account within one to three business days. You can withdraw up to your cash advance limit, which is usually lower than your overall credit limit — often 20 to 50 percent of it.
The cost structure is three-part. First, there is an upfront fee: typically 3 to 5 percent of the amount withdrawn. If you take out $500, you might pay $15 to $25 just to get the cash. Second, the interest rate is higher than your purchase rate — often 5 to 10 percentage points above it. Third, interest starts accruing the day you withdraw, with no grace period. If you carry the balance for a month, you will owe interest for the full month, not just the days you held the money.
Because of these costs, a cash advance should be a last resort. If you need $500 and carry it for three months at a 25 percent interest rate, you will pay roughly $31 in interest alone, plus the initial fee. A personal loan or line of credit, if you have access to one, is almost always cheaper.
Balance transfers: moving debt to a lower rate
A balance transfer moves an existing balance from one credit card to another, usually one with a promotional rate. Many cards offer 0 percent interest for 6 to 21 months on transferred balances, which can save you hundreds of dollars if you are currently paying 18 to 25 percent on another card.
The process is straightforward: you contact the new card issuer, provide the account number of the card you want to transfer from, and specify the amount. The new issuer pays off that balance on your old card, and you now owe the balance to them. The transfer typically completes within two to three weeks.
The fee is usually 3 to 5 percent of the amount transferred, charged upfront and added to your new balance. If you transfer $3,000 at a 3 percent fee, you owe $3,090 on the new card. The math still works in your favor if the promotional rate is 0 percent and your old rate was 20 percent — you save roughly $600 in interest over a year, even after paying the $90 fee.
The risk is the promotional period ending. When the 0 percent rate expires, the interest rate jumps to the card's regular rate, often 18 to 25 percent. If you still carry a balance at that point, you will owe interest at the higher rate. Plan to pay down the balance before the promotional period ends, or the savings disappear.
How cash advances and balance transfers affect your credit
Both options reduce your available credit when ready. If your credit limit is $5,000 and you take a $2,000 cash advance, your available credit drops to $3,000. This increases your credit utilization ratio — the percentage of your available credit you are using. Credit scoring models penalize high utilization, so pushing it above 30 percent can lower your score by 10 to 50 points, depending on your current score and history.
The impact is temporary if you pay the balance quickly. Once you pay down the cash advance or balance transfer, your utilization drops and your score recovers. But if you carry the balance for months, the lower score can affect your ability to get approved for new credit or get favorable rates on loans.
A balance transfer can actually help your credit in one way: if you are consolidating multiple high-balance cards onto one, your utilization on those original cards drops to zero, which can improve your score. But only if you do not run up the original cards again.
When a cash advance makes sense versus alternatives
A cash advance makes sense only when you need cash when ready and have no other option. Examples: an unexpected car repair, a medical bill, or a deposit for housing. Even then, check whether a personal loan, line of credit, or payment plan from the vendor is available first — they are almost always cheaper.
If you are considering a cash advance because you are short on cash regularly, that is a sign to look at your budget or income, not to use your credit card as a cash machine. Repeated cash advances will cost you hundreds of dollars a year and can spiral into debt.
A balance transfer makes sense if you are carrying a balance on a high-rate card and can pay it down within the promotional period. If you have $5,000 at 22 percent and transfer it to a card offering 0 percent for 12 months, you save roughly $1,100 in interest if you pay it off in that year. The 3 percent fee is worth it. But if you cannot commit to paying it down in time, the savings evaporate.
Comparing cash advances to other ways to borrow
| Option | Cost | Speed | Credit Impact |
|---|---|---|---|
| Credit card cash advance | 3–5% fee + 20–30% interest, no grace period | 1–3 days | Reduces available credit; high utilization hurts score |
| Personal loan | 6–36% interest depending on credit, fixed term | 1–5 days | Hard inquiry lowers score slightly; installment payments help long-term |
| Line of credit | Prime + margin (usually 8–18%), interest only on what you use | 1–3 days if pre-approved | Similar to personal loan; only affects score if you draw on it |
| Payday loan | $15–$20 per $100 borrowed (400%+ APR) | Same day | Usually does not report to credit bureaus, but can trap you in debt |
| Balance transfer | 3–5% fee, 0% for 6–21 months then 18–25% | 2–3 weeks | Reduces available credit; helps if you consolidate multiple cards |
A personal loan is usually the cheapest option if you have decent credit and time to wait a few days. Interest rates are fixed and lower than credit card rates, and you repay in installments over a set term. A line of credit works similarly but lets you draw only what you need.
Payday loans are faster but far more expensive than a cash advance — the effective interest rate is often 400 percent or higher. Avoid them unless you are certain you can repay within two weeks.
Steps to take a cash advance safely
If you decide a cash advance is necessary, follow these steps to minimize the damage. First, check your card's cash advance limit and fee in your cardholder agreement or by calling the number on the back of your card. Know the exact cost before you proceed.
Second, withdraw only what you need. The fee and interest explore to the full amount, so taking out $500 when you need $300 costs you an extra $6 to $15 in fees alone.
Third, pay it back as fast as possible. Every day you carry the balance, interest accrues. If you can repay it within a week or two, the total cost is manageable. If it will take months, reconsider whether a personal loan is available instead.
Fourth, do not use the cash advance to fund spending — use it only for the emergency it was meant for. Taking a cash advance to pay bills and then running up the card again is how debt spirals.
Frequently Asked Questions
Can I use a cash advance to pay off another credit card?
Technically yes, but it is a bad idea. You would pay the cash advance fee and interest rate on money you are using to pay off another card's balance. A balance transfer is designed for exactly this situation and costs less. If you cannot do a balance transfer, a personal loan is cheaper than a cash advance.
What is the difference between a cash advance and a convenience check?
A convenience check is a check your card issuer sends you that draws from your credit line. It works like a cash advance — same fee, same interest rate, same lack of grace period — but you write it like a regular check instead of using an ATM. The cost is identical, so there is no advantage to using one.
Does a cash advance show up on my credit report?
The cash advance itself does not show as a separate line item, but it reduces your available credit and increases your utilization ratio, which credit bureaus see. If it pushes your utilization above 30 percent, it can lower your score. Once you pay it off, the impact fades.
Can I take a cash advance from a credit card I just opened?
Usually yes, but some issuers restrict cash advances on new accounts for the first 30 to 90 days. Check your cardholder agreement or call the issuer to confirm. Even if you can, the fee and interest rate explore the same way.
What happens if I cannot pay back a cash advance?
It becomes part of your credit card balance and accrues interest at the higher cash advance rate. If you miss payments, it damages your credit score and can lead to collection action. If you are struggling to repay, contact your card issuer about a hardship program or payment plan before the account goes delinquent.