What a credit card cash advance is
A cash advance is when you borrow money against your credit card's line of credit, usually by withdrawing cash from an ATM, bank teller, or convenience store. Unlike a purchase, the money goes directly into your pocket rather than paying a merchant. The moment you withdraw it, interest starts accruing — there is no grace period like there is for regular purchases.
The cost of a cash advance is almost always higher than the cost of a regular purchase on the same card. You pay an upfront fee (typically 3 to 5 percent of the amount withdrawn), a higher interest rate (often several percentage points above your purchase rate), and interest compounds daily from the withdrawal date forward.
Key Takeaways
- Cash advances charge an upfront fee of 3 to 5 percent plus a higher interest rate than purchases, with interest starting when ready and no grace period.
- You can withdraw a cash advance from an ATM, bank branch, or convenience store, but the amount is limited by your card's cash advance limit, which is usually lower than your credit limit.
- The total cost depends on how long you carry the balance — even a small advance can cost $50 to $100 in fees and interest if you pay it back over several months.
- Alternatives like personal loans, payday loans from credit unions, or borrowing from friends typically cost less unless you have poor credit or need the money within hours.
How to get a cash advance from your credit card
The process is straightforward but the location matters. You can withdraw cash at any ATM that accepts your card's network (Visa, Mastercard, American Express, or Discover). You can also visit your card issuer's bank branch and ask a teller for a cash advance, or use a convenience store that offers cash advances at the register.
Before you withdraw, check your card's cash advance limit — this is separate from your credit limit and is usually much lower. If your credit limit is $5,000, your cash advance limit might be $500 or $1,000. Your card issuer sets this limit and you can call the number on the back of your card to find out what yours is.
At an ATM, insert your card, enter your PIN, select "cash advance" or "withdrawal," and choose the amount. The ATM will show you the fee before you confirm. At a bank branch or convenience store, tell the clerk you want a cash advance and provide your card and ID.
Fees and interest rates for cash advances
A cash advance typically costs more than a purchase in three ways. First, there is an upfront fee charged at the time of withdrawal — this is usually a flat amount (like $5) or a percentage of the amount withdrawn (like 3 to 5 percent), whichever is greater. A $200 advance with a 5 percent fee costs $10 when ready.
Second, the interest rate on a cash advance is higher than the rate on purchases. If your purchase APR is 18 percent, your cash advance APR might be 24 or 25 percent. Third, interest starts accruing the day you withdraw the money — there is no 21-day grace period like there often is for purchases. This means interest compounds daily from day one.
To see the real cost, consider a $300 cash advance at 5 percent fee and 24 percent APR, paid back over three months. The upfront fee is $15. The interest over three months is roughly $18. Total cost: $33, or 11 percent of the amount borrowed. Over six months, the interest alone reaches $36, making the total cost $51.
When a cash advance makes sense
A cash advance is rarely the cheapest option, but there are situations where it is the fastest or only option available. If you need cash within hours and have no other source, and you can pay it back within a week or two, the total cost may be acceptable. A $200 advance with a $10 fee, paid back in one week, costs only $10 plus a few dollars in interest.
A cash advance also makes sense if you have exhausted other options and your credit is too poor to get a personal loan. If you have a credit card but cannot get approved for a bank loan or credit union loan, the cash advance is available to you when ready, even though it is expensive.
A cash advance does not make sense if you plan to carry the balance for months, if you have access to a personal loan or credit union loan at a lower rate, or if you can borrow from family or friends. In those cases, the interest and fees will cost you far more than the alternative.
Alternatives to a credit card cash advance
A personal loan from a bank or credit union typically charges 6 to 36 percent APR depending on your credit, with no upfront fee. If you have decent credit and can wait three to five business days for funding, a personal loan is almost always cheaper than a cash advance, especially if you need to borrow more than $500.
A credit union loan is often cheaper than a bank personal loan, and credit unions sometimes offer small emergency loans with same-day or next-day funding. If you are a member of a credit union, call and ask about their short-term loan options before using a cash advance.
A payday loan from a credit union (not a payday lender) can be an option if you need money within 24 hours and have poor credit. Credit union payday loans are capped at lower rates than commercial payday lenders and are designed to be repaid in one or two weeks. Commercial payday lenders charge 400 percent APR or higher and should be avoided.
Borrowing from family or friends, if possible, costs nothing and has no interest. If you go this route, put the terms in writing — even a straightforward text message saying "I will pay you back $300 by June 15" — to avoid misunderstandings later.
How cash advances affect your credit
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 you have a $5,000 credit limit and a $500 cash advance limit, and you withdraw $400, your utilization jumps to 8 percent of your total credit limit. High utilization (above 30 percent) can lower your score by 10 to 50 points.
A cash advance also shows up on your credit report as a cash advance, not a purchase. This does not damage your score directly, but it signals to future lenders that you have borrowed against your card, which some lenders view as a sign of financial stress.
If you carry the cash advance balance and miss a payment, that missed payment will hurt your score significantly — much more than the cash advance itself. This is why paying back a cash advance quickly is important, both for your wallet and your credit.
Frequently Asked Questions
Can I use a cash advance to pay off other debts?
Technically yes, but it is usually a bad idea. You are borrowing at a high rate (24 to 25 percent) with an upfront fee to pay off debt that might be at a lower rate. If you are paying off a credit card purchase at 18 percent, you are making the problem worse. The only exception is if you are paying off a payday loan or other debt at an even higher rate.
What happens if I cannot pay back a cash advance?
The balance stays on your credit card and interest keeps accruing daily. If you miss a payment, the missed payment goes on your credit report and your interest rate may increase. After 180 days of missed payments, the card issuer may close your account and send the debt to a collection agency. Contact your card issuer when ready if you cannot pay — they may offer a hardship program or payment plan.
Is there a limit to how much I can withdraw?
Yes. Your card issuer sets a cash advance limit, which is usually 20 to 50 percent of your credit limit. You can call the number on the back of your card to find out your limit. Some ATMs also have daily withdrawal limits, which may be lower than your card's cash advance limit.
Do I have to pay back a cash advance before purchases?
No. Your payment goes toward your entire balance, and the card issuer decides how to allocate it. However, because the cash advance has a higher interest rate, it costs you more to carry it. Paying extra toward the cash advance balance first will save you money on interest.
Can I get a cash advance from a debit card?
No. A debit card draws directly from your bank account, so there is no credit line to borrow against. You can withdraw money from an ATM using a debit card, but that is your own money, not a loan. Some banks offer overdraft protection, which lets you go negative, but that is a separate product with its own fees.