What a credit card cash advance is and how it works
A cash advance is when you borrow money directly from your credit card issuer using your card's cash advance limit. Unlike a purchase, which goes on your regular credit card balance, a cash advance puts you into debt when ready — you owe the money back the moment you take it out. The issuer charges you a fee upfront (usually 3 to 5 percent of the amount you withdraw) and starts charging interest right away, with no grace period like you get on purchases.
You access a cash advance in one of three ways: at an ATM using your card's PIN, at a bank teller's window, or through a convenience check the issuer mails you. The cash advance limit is separate from your regular credit limit — you might have a $5,000 purchase limit but only a $1,000 cash advance limit, depending on your card and credit history.
The cost of a cash advance is almost always higher than the cost of a regular purchase. Interest rates on cash advances typically run 2 to 3 percentage points higher than your purchase APR, and that interest starts accruing when ready. A $500 cash advance at a 5 percent fee plus 25 percent APR costs you $25 upfront and then roughly $10 per month in interest if you carry the balance.
Key Takeaways
- A cash advance charges a fee of 3 to 5 percent upfront and starts charging interest when ready with no grace period.
- You can withdraw cash at an ATM, at a bank teller, or by using a convenience check, depending on what your card issuer offers.
- The interest rate on a cash advance is usually 2 to 3 percentage points higher than your regular purchase rate.
- Your cash advance limit is separate from your purchase limit and is often much smaller.
- Paying off a cash advance takes priority over paying off purchases because the interest rate is higher.
Finding your cash advance limit and PIN
Your cash advance limit is set by your card issuer when you open the account. You can find it by logging into your online account portal or mobile app — most issuers list it under "Account Details" or "Credit Limits" alongside your purchase limit. You can also call the customer service number on the back of your card and ask a representative directly.
If you have never used a cash advance before, you may not have a PIN set up yet. You will need one to withdraw cash at an ATM. To set or reset your PIN, log into your online account, use the mobile app, or call customer service. Most issuers let you create a PIN when ready online or over the phone, and it becomes active within minutes or a few hours.
Some older cards or cards from smaller issuers may not offer ATM cash advances at all. If you cannot find a cash advance option in your account portal or the customer service representative says your card does not support it, you can still get a cash advance by visiting a bank teller or using a convenience check if your issuer mails them.
How to withdraw cash at an ATM
Insert your credit card into an ATM that displays your card network's logo (Visa, Mastercard, American Express, or Discover). Enter your PIN when prompted. Select "Cash Advance" or "Cash Withdrawal" from the menu — do not select "Balance Inquiry" or "Transfer Funds." Enter the amount you want to withdraw, up to your cash advance limit. The ATM will show you the fee amount before you confirm the transaction.
The ATM will dispense the cash and print a receipt. Your card issuer will charge the fee to your credit card account when ready, and interest will begin accruing on the withdrawn amount right away. The transaction typically shows up in your online account within a few hours.
Not all ATMs accept credit card cash advances — many are set up only for debit cards and bank accounts. If an ATM rejects your card, try a different machine or visit a bank branch instead. ATMs at your card issuer's own bank are most likely to accept credit card cash advances.
Getting a cash advance at a bank teller
Walk into any bank branch that accepts your card network (most major banks accept Visa and Mastercard). Bring your credit card and a photo ID. Tell the teller you want a cash advance on your credit card. The teller will swipe your card, verify your identity, and ask how much you want to withdraw.
The teller will show you the fee amount and ask you to confirm. Once you approve, they will count out the cash and give it to you along with a receipt. The fee and the cash advance amount will both post to your credit card account, usually within one business day.
Bank tellers can process larger cash advances than ATMs allow, and you do not need a PIN. However, you are limited to the bank's business hours, and you may face a wait if the branch is busy. Some banks charge an additional fee on top of your card issuer's fee if you are not a customer of that bank.
Understanding the costs and interest charges
The fee for a cash advance is charged once, upfront, and is usually a percentage of the amount you withdraw. A $300 cash advance with a 4 percent fee costs you $12 when ready. This fee is added to your credit card balance.
Interest on a cash advance begins the day you withdraw it — there is no grace period. If your cash advance APR is 26 percent and you withdraw $300, you will owe roughly $6.50 in interest after one month if you make no payment. The longer you carry the balance, the more interest compounds.
When you make a payment on your credit card, the payment is applied first to your lowest-interest balance (usually purchases) and last to your highest-interest balance (usually cash advances). This means if you have both a purchase balance and a cash advance balance, your payment will pay down the purchase first, leaving the cash advance to accrue interest longer. To pay off a cash advance faster, you may need to make a payment larger than your minimum or specify that the payment should go toward the cash advance.
When a cash advance makes sense and when it does not
A cash advance is useful only in narrow situations. If you need cash for an emergency and have no other way to get it — no savings, no access to a personal loan, no friends or family to borrow from — a cash advance is better than missing a bill payment or overdrawing a bank account. The fee and interest are high, but they are a one-time cost and ongoing interest, not a permanent mark on your credit.
A cash advance does not make sense if you have other options. A personal loan from a bank or credit union usually charges lower interest and no upfront fee. A balance transfer to a 0 percent APR card costs less if you can pay it off during the promotional period. Asking your creditor for a payment extension or hardship program costs nothing. Even a payday loan, which is expensive, is sometimes cheaper than a cash advance if you can repay it within two weeks.
Never take a cash advance to pay off another credit card or to fund a purchase you cannot otherwise afford. The interest and fees will trap you in a cycle of debt that gets harder to escape the longer you carry it.
How a cash advance affects your credit score
Taking a cash advance does not hurt your credit score directly. Your issuer does a soft inquiry (which does not show up on your credit report) and does not report the cash advance as a separate account. However, a cash advance does increase your credit utilization — the percentage of your available credit you are using. If you have a $5,000 credit limit and take a $1,000 cash advance, your utilization jumps to 20 percent. High utilization can lower your score by a few points.
Missing a payment on a cash advance or letting the balance grow unpaid will hurt your score much more. A late payment stays on your credit report for seven years and can lower your score by 100 points or more. If you take a cash advance, make a plan to pay it back within a few months so the utilization drops and you avoid interest charges that spiral.
Frequently Asked Questions
Can I take a cash advance if I have a low credit limit?
Yes. Your cash advance limit is set separately from your purchase limit, and it is often smaller. If your purchase limit is $2,000 but your cash advance limit is $500, you can withdraw up to $500 in cash. If you need more, you can contact your issuer to request an increase, though approval is not may provide.
What happens if I do not pay back a cash advance?
The balance will accrue interest at your cash advance APR every month. After 30 days of non-payment, the issuer will report it as late to the credit bureaus, which will damage your credit score. After 180 days of non-payment, the issuer may close your account and send the debt to a collection agency.
Can I use a convenience check for a cash advance?
Yes, if your issuer mails them to you. A convenience check works like a regular check but draws from your credit card account instead of a bank account. You write the check to yourself or to a payee, deposit it in your bank, and the amount is treated as a cash advance with the same fee and interest rate.
Is a cash advance better or worse than a payday loan?
It depends on the amount and how long you carry it. A payday loan charges a flat fee (usually $15 to $20 per $100 borrowed) but is meant to be repaid in two weeks. A cash advance charges a percentage fee plus interest that compounds monthly. For a small amount repaid quickly, a payday loan may cost less. For larger amounts or longer repayment periods, a credit card cash advance is usually cheaper.
Can I transfer a cash advance to a different credit card?
No. A cash advance is cash in your hand, not a balance on your card. You cannot transfer it like you would transfer a purchase balance. However, once you deposit the cash in your bank account, you could use it to pay off a balance on another card or make a balance transfer payment.