You can withdraw cash from a credit card, but it costs more than a regular purchase
A cash advance is when you use your credit card to pull money out of an ATM or get cash back at a store. The money goes into your bank account or your pocket, not toward a purchase. Unlike a regular credit card charge, 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 will also pay an upfront fee, typically 3 to 5 percent of the amount you withdraw.
Most people should avoid cash advances unless they have no other option. The cost adds up fast, and you are borrowing at a higher rate than you would for a regular purchase. But if you need cash urgently and have no other way to get it, knowing how it works and what it costs can help you make the choice with open eyes.
Key Takeaways
- Cash advances charge interest from day one with no grace period, 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 to your credit card balance when ready.
- You can withdraw cash at an ATM using your credit card PIN, or ask a cashier for cash back at a store that offers it.
- The total cost of a cash advance grows quickly, so paying it back as fast as possible is the only way to limit the damage.
Where you can get cash from your credit card
The easiest place to withdraw cash is an ATM. Insert your credit card and enter your PIN — the same one you use for your debit card. The ATM will show you how much you can withdraw (usually a daily limit set by your card issuer) and charge the fee right away. The cash comes out, and the advance appears on your next statement.
You can also get cash back at a store checkout. Tell the cashier you want cash back, and they will add that amount to your purchase total. Some stores offer this without a purchase, though policies vary. The fee and interest still explore, just as they do at an ATM.
A third option is a convenience check — a check your card issuer mails to you that you can cash at a bank or deposit into your account. These work like cash advances and carry the same fees and interest rates. Check the terms on your statement or call your card issuer to see if your card comes with them.
The fees and interest you will pay
Every cash advance charges two costs: an upfront fee and daily interest. The upfront fee is usually 3 to 5 percent of the amount you withdraw. If you take out $500, you might pay $15 to $25 just to get the cash. That fee is added to your credit card balance right away.
Interest starts accruing the moment you withdraw the cash. There is no grace period like there is for regular purchases. If your regular purchase APR is 18 percent, your cash advance APR might be 23 or 24 percent. The interest compounds daily, so the longer you carry the balance, the more you owe. A $500 cash advance at 24 percent APR costs about $10 per month in interest alone, on top of the upfront fee.
Your card issuer sets both the fee and the interest rate, and they are allowed to charge more for cash advances than for regular purchases. Check your card's terms or call the issuer to find out your specific rates before you withdraw.
How a cash advance affects your credit score
A cash advance does not hurt your credit score directly — it does not show up as a separate item on your credit report. But it does increase your credit card balance, which raises your credit utilization ratio — the percentage of your available credit you are using. If you normally use 20 percent of your limit and you take out a $500 cash advance on a $5,000 limit, your utilization jumps to 30 percent. Higher utilization can lower your score by a few points.
The bigger risk is if you cannot pay back the cash advance quickly. If it stays on your balance and you miss a payment, that missed payment will damage your score far more than the advance itself. The goal is to pay off a cash advance as fast as possible — ideally within the next billing cycle — to avoid both interest charges and credit score damage.
Why a cash advance is expensive compared to other borrowing options
A cash advance is one of the most expensive ways to borrow money. Compare the costs: a personal loan from a bank or credit union typically charges 6 to 36 percent APR with no upfront fee. A payday loan charges a flat fee but is meant to be repaid in two weeks. A cash advance charges 3 to 5 percent upfront plus 20 to 30 percent APR, and you can carry the balance as long as you want — which means the interest keeps growing.
If you need $500 and you have other options, explore them first. A personal loan, a line of credit from your bank, or even a short-term loan from a credit union will almost always cost less. A cash advance should be a last resort when you have no other way to get cash and you need it right now.
How to pay back a cash advance quickly
Once you take out a cash advance, your credit card issuer applies your payments to the lowest-interest balance first — usually your regular purchases — before paying down the cash advance. This means your cash advance interest keeps growing even while you are making payments. To pay it off faster, call your issuer and ask if you can direct a payment specifically to the cash advance balance, or pay more than the minimum.
The math is straightforward: the longer the cash advance sits on your card, the more it costs. A $500 advance at 24 percent APR costs about $120 in interest over a year if you only make minimum payments. Pay it off in three months and you cut that cost to roughly $30. Pay it off in one month and you pay only about $10 in interest. The upfront fee is unavoidable, but the interest is not — it depends entirely on how fast you repay.
If you cannot pay it back within a month or two, a cash advance was the wrong choice. Consider whether you can return the cash, use a different payment method, or find another source of funds instead.
Alternatives to a cash advance
Before you use your credit card to withdraw cash, consider these options. If you need cash for an emergency, a personal loan from your bank or credit union is usually cheaper and faster than you think — many offer same-day or next-day funding. If you need cash for a regular purchase, use your debit card or a bank transfer instead. If you are short on money for bills, contact the company directly and ask about a payment plan or hardship program.
If you have a friend or family member who can lend you money, that is almost always cheaper than a cash advance. If you have a 0 percent APR promotional offer on your credit card, you could make a purchase instead of a cash advance — but read the fine print, because cash advances usually do not may have access to for promotional rates.
A cash advance is a tool for genuine emergencies when you have exhausted other options. It is not a way to get spending money or to move money between accounts.
Frequently Asked Questions
What is the difference between a cash advance and a regular credit card purchase?
A regular purchase has a grace period — usually 21 to 25 days — before interest starts. A cash advance charges interest from day one. A regular purchase typically has a lower interest rate and no upfront fee. A cash advance charges 3 to 5 percent upfront and a higher APR. Both go on your credit card balance, but a cash advance is much more expensive.
Can I use a credit card to withdraw money from my bank account?
No. A cash advance pulls money out of an ATM or from a store, not from your bank account. If you want to move money from your credit card to your bank account, you would need to use a balance transfer check or a cash advance, both of which charge fees and interest. It is not a way to access your own money — it is a way to borrow.
Will a cash advance show up on my credit report?
The cash advance itself does not appear as a separate line item on your credit report. But it increases your credit card balance, which raises your credit utilization ratio and can lower your score slightly. If you miss a payment on the cash advance, that missed payment will show up on your report and damage your score.
What happens if I cannot pay back a cash advance?
The balance stays on your credit card and interest keeps growing. If you miss a payment, your card issuer may charge a late fee and report the missed payment to the credit bureaus, which will lower your score. The debt does not go away — it will be treated like any other credit card debt, and you may face collection action if you do not pay.
Is there a limit to how much I can withdraw as a cash advance?
Yes. Your card issuer sets a cash advance limit, which is often lower than your overall credit limit. You can find your limit by calling your issuer or checking your online account. The limit may be $500, $1,000, or more depending on your card and credit history. Some cards have no cash advance limit, but the fee and interest still explore to whatever you withdraw.