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 — a separate borrowing allowance from your regular credit limit. You walk into an ATM or bank branch, insert your card, enter your PIN, and withdraw cash the same way you would from a debit card. The money hits your account within minutes.
The catch is that cash advances cost more than regular purchases. You pay an upfront fee (usually 3 to 5 percent of the amount withdrawn), and interest starts accruing when ready — there is no grace period like there is for purchases. Interest rates on cash advances are also typically higher than your card's regular APR, sometimes 2 to 3 percentage points above it. If you withdraw $500, you might pay $15 to $25 in fees alone, plus interest from day one.
Credit card companies set a cash advance limit that is often lower than your total credit limit. You might have a $5,000 credit limit but only a $1,500 cash advance limit. You can usually find your limit in your online account or by calling the number on the back of your card.
Key Takeaways
- Cash advances charge an upfront fee of 3 to 5 percent plus a higher interest rate than regular purchases, with interest starting when ready.
- You can withdraw cash at any ATM that accepts your card, at your bank's teller window, or through a convenience check from your issuer.
- Your cash advance limit is separate from your regular credit limit and is often much lower.
- Paying back a cash advance should be your priority because the interest and fees accumulate faster than on regular card purchases.
Where to withdraw a cash advance
The easiest method is an ATM. Insert your credit card into any ATM that displays your card's logo (Visa, Mastercard, American Express, Discover), enter your PIN, select "cash advance" or "withdrawal," and choose your amount. The ATM will show you the fee before you confirm. Most transactions complete in seconds.
If you do not know your PIN, you can set one up through your card issuer's website or app, or call the number on the back of your card and request a PIN be mailed to you. Some issuers let you set a temporary PIN over the phone when ready.
A second option is your bank's teller window. Bring your credit card and a photo ID, tell the teller you want a cash advance, and they will process it. This works even if the bank is not your card issuer — any bank can process a cash advance on any major credit card.
A third option, less common now, is a convenience check. Your card issuer may mail you checks that draw against your cash advance limit. You write one to yourself or a payee, deposit it, and the amount is treated as a cash advance. These checks carry the same fees and interest rates as ATM withdrawals.
What happens to your credit when you take a cash advance
A cash advance counts against your credit utilization ratio — the percentage of your total available credit you are using. If you have a $5,000 credit limit and take a $500 cash advance, your utilization jumps to 10 percent. High utilization can lower your credit score, especially if you carry the balance for weeks or months.
The cash advance itself does not appear as a separate line item on your credit report. It shows up as part of your overall credit card balance. However, the issuer reports the balance to the credit bureaus, so the impact on your score is the same as any other charge.
Paying back the cash advance quickly — within a week or two — minimizes the damage to your score. Carrying it for months will hurt more than a regular purchase would, because of the higher interest rate and the fact that you are paying more in total interest, which keeps your balance higher for longer.
Fees and interest you will pay
Every cash advance comes with a transaction fee, charged upfront. This is usually a flat amount (like $5 to $10) or a percentage of the withdrawal (3 to 5 percent), whichever is greater. A $100 advance might cost $5 flat; a $1,000 advance might cost $50 (5 percent).
Interest begins accruing the moment you withdraw the cash. Unlike regular purchases, which have a grace period (usually 21 to 25 days before interest kicks in), cash advances charge interest from day one. The daily interest rate is your card's cash advance APR divided by 365. If your cash advance APR is 24 percent, you pay roughly 0.066 percent per day.
On a $500 cash advance at 24 percent APR held for 30 days, you would pay approximately $10 in interest, plus the upfront fee. Over 90 days, interest alone could reach $30. The longer you carry it, the more the total cost compounds.
When you make a payment to your card, the issuer typically applies it to your lowest-interest debt first — usually regular purchases — before touching the cash advance. This means if you have both a purchase balance and a cash advance balance, your payment goes to the purchase first, and the cash advance keeps accruing interest. Pay extra to may support some of your payment goes toward the cash advance.
When a cash advance makes sense
A cash advance is useful in a genuine emergency when you need physical cash and have no other option. Examples include a car repair that requires cash payment, a medical expense at a clinic that does not take cards, or a situation where your debit card is lost and you need when ready access to funds.
It is not a good idea for everyday cash needs, bill payments you can make by check or transfer, or situations where you could wait a day or two for a bank transfer. A personal loan, a line of credit, or even a payday loan (if you understand the terms) will often cost less than a credit card cash advance.
If you are considering a cash advance because you are short on money regularly, that is a sign to review your budget or look into lower-cost borrowing options. Repeated cash advances will damage your credit score and trap you in a cycle of high-interest debt.
How to pay back a cash advance quickly
Make a payment to your card as soon as possible after the withdrawal. Log into your online account or call your issuer and pay at least the full cash advance amount, plus the fee. If you can pay the entire balance, do that.
If you cannot pay it all at once, pay as much as you can toward the cash advance specifically. Some issuers let you direct a payment to a particular balance type (purchase vs. cash advance) through their website. If yours does not, call and ask the representative to note that your payment should go toward the cash advance.
Set a reminder to check your balance in a week. Interest compounds daily, so even a small balance left unpaid will grow. Paying it off within 7 to 14 days keeps the total interest cost under $5 to $10 for most amounts.
Alternatives to a credit card cash advance
If you need cash but want to avoid the high fees and interest, consider these options first:
- Debit card withdrawal: If you have a debit card linked to a checking account with funds, use that instead. No fees, no interest.
- Bank transfer or ACH: If you need to move money between your own accounts or receive a payment, a bank transfer is free and takes 1 to 3 business days.
- Paycheck advance: Some employers offer early access to earned wages through apps like Earnin or Payactiv. Fees are lower than cash advances.
- Personal loan: If you need a larger amount and have time to wait, a personal loan from a bank or credit union usually has a lower APR than a credit card cash advance.
- Asking for help: Borrowing from family or friends, if possible, costs nothing and avoids debt entirely.
Frequently Asked Questions
Can I use a credit card cash advance to pay another credit card bill?
Technically yes, but it is a bad idea. You would be paying a cash advance fee and interest rate on money borrowed to pay another card's interest. You would end up paying more in total fees and interest than if you straightforward carried the balance on the original card. If you are juggling multiple cards, focus on paying down the highest-interest balance first instead.
What is the difference between a cash advance and a balance transfer?
A balance transfer moves debt from one card to another (usually with a lower introductory rate), while a cash advance gives you physical cash. Balance transfers are meant for existing debt; cash advances are for getting cash. Balance transfers often have a fee too, but the introductory rate can be 0 percent for 6 to 21 months, making them cheaper long-term if you carry a balance.
Will taking a cash advance hurt my credit score?
Yes, temporarily. It raises your credit utilization ratio, which can lower your score by 10 to 50 points depending on how much you borrow. The impact fades as you pay it back and your utilization drops. Carrying a cash advance for months will hurt more than paying it off within a week or two.
Can I take a cash advance if I have a zero balance on my card?
Yes. Your cash advance limit is separate from your regular credit limit, so you can use it even if you have not charged anything. However, you still pay the fee and interest when ready, so only do this in a genuine emergency.
What happens if I do not pay back a cash advance?
The balance stays on your card, interest keeps accruing daily, and your credit score continues to drop. After 30 days of non-payment, the issuer may report it to the credit bureaus. After 180 days, they may charge off the account and sell the debt to a collection agency. At that point, collectors can contact you and potentially sue. Pay what you can, even if it is just the minimum, to avoid this.