The three ways to pull cash from a credit card
You can get cash from a credit card in three ways: a cash advance at an ATM or bank, a balance transfer check mailed by your card issuer, or a cash-like transaction such as buying casino chips or cryptocurrency. All three charge you fees and interest from the moment you take the money — there is no grace period like there is for purchases. A cash advance typically costs 3 to 5 percent of the amount withdrawn, plus a daily interest rate that starts when ready. Balance transfer checks usually cost 3 to 5 percent as well. Cash-like transactions are treated as cash advances by most issuers, so they carry the same fees and rates.
The reason to know all three is that they have different limits and different costs depending on your card and your bank. A cash advance at an ATM may be capped at $500 or $1,000 per day, while a balance transfer check might let you access more. If you need cash and have a choice, comparing the fee structure across all three can save you money.
Key Takeaways
- Cash advances charge a fee (usually 3 to 5 percent) and a higher interest rate than purchases, with interest starting when ready and no grace period.
- Your daily ATM withdrawal limit is often much lower than your total credit limit, so you may not be able to pull out as much cash as you think.
- Balance transfer checks work like cash advances but may have a higher withdrawal limit and sometimes a lower fee if your card offers them.
- Cash-like transactions such as buying gift cards, cryptocurrency, or gambling chips are usually treated as cash advances by your card issuer.
- The interest rate for cash advances is typically higher than the rate for regular purchases on the same card.
How a cash advance at an ATM works
To withdraw cash at an ATM, insert your credit card and enter your PIN. If you do not have a PIN, contact your card issuer to set one up — you cannot use a credit card at an ATM without it. The ATM will show you your available cash advance limit, which is usually lower than your total credit limit. For example, you might have a $5,000 credit limit but only a $1,000 cash advance limit.
The ATM will also show you the fee before you confirm the withdrawal. This fee is separate from interest and is charged once, at the time of withdrawal. After you take the cash, interest begins to accrue on the full amount at your card's cash advance rate, which is typically 2 to 3 percentage points higher than your purchase rate. If your purchase APR is 18 percent, your cash advance APR might be 21 or 22 percent. You will see both the fee and the accruing interest on your next statement.
Most card issuers set a daily ATM limit of $500 to $1,000, though some allow more. If you need more cash than your daily limit allows, you can withdraw again the next day, but each withdrawal carries its own fee. Check your card's terms or call the issuer to find out your specific daily limit and cash advance limit.
Balance transfer checks and their limits
Some credit card issuers mail balance transfer checks to cardholders. These checks draw directly from your credit line and work like a cash advance — the fee and interest rate are the same. The advantage is that balance transfer checks often have a higher single withdrawal limit than an ATM, sometimes $2,500 or more depending on your card and credit limit.
To use a balance transfer check, you straightforward write it out and deposit it into your bank account, just like a regular check. The issuer charges the fee and begins charging interest when ready. If you have not received balance transfer checks from your card issuer, you can call and ask whether they offer them. Not all issuers do, and not all cardholders are offered them.
One thing to watch: some issuers offer a lower promotional rate on balance transfers than on cash advances. If your card has this offer, a balance transfer check might be cheaper than an ATM withdrawal. Read your card's terms or call to compare the two rates before you decide which method to use.
Why cash-like purchases count as cash advances
Buying certain items with your credit card is treated as a cash advance by most issuers, even though you are not withdrawing physical cash. These include gift cards, prepaid cards, cryptocurrency, casino chips, lottery tickets, and money orders. The issuer charges you the cash advance fee and the higher cash advance interest rate, just as if you had used an ATM.
This matters because you might think you are making a regular purchase when you are actually triggering cash advance fees and rates. If you buy a $500 gift card with your credit card, you will pay a $15 to $25 fee upfront and then interest at your cash advance rate, not your purchase rate. The same applies to buying Bitcoin or chips at a casino.
The reason issuers classify these as cash advances is that they are essentially converting credit into cash or cash-equivalent value. If you need to buy a gift card or prepaid card, using a debit card or bank transfer is usually cheaper than using a credit card.
The fees and interest you will pay
A cash advance costs you money in two ways: an upfront fee and ongoing interest. The upfront fee is typically 3 to 5 percent of the amount withdrawn, with a minimum fee of $5 to $10. So a $200 withdrawal might cost $6 to $10 in fees, while a $1,000 withdrawal might cost $30 to $50.
Interest starts accruing when ready on the full amount, at your card's cash advance APR. Unlike purchases, there is no grace period — you do not get 21 days interest-free. If your cash advance APR is 22 percent and you withdraw $1,000, you will owe roughly $18 in interest after one month, assuming you make no payments. The longer you carry the balance, the more interest you pay.
To see the real cost, imagine you withdraw $1,000 at a 4 percent fee and 22 percent APR. You pay $40 in fees when ready. If you pay back $100 per month, it will take you about 12 months to repay the full amount, and you will pay roughly $130 in interest on top of the $40 fee — a total of $170 in costs. The longer you carry the balance, the higher this number climbs.
When a cash advance might make sense
A cash advance is expensive, so it makes sense only in specific 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 letting an emergency go unaddressed. The fees and interest are real costs, but they are usually lower than a late payment fee or the damage to your credit from missing a payment.
Another situation is if you are paying off a large balance and a cash advance is the only way to cover a necessary expense without adding to that balance. In this case, the cost of the cash advance might be less than the cost of carrying a higher balance longer.
A cash advance is usually not a good idea if you are using it to fund discretionary spending, to pay off other debts, or to invest. In those cases, the fees and interest make the cost too high. If you find yourself regularly needing cash advances, that is a sign that your income and expenses are out of balance, and you should work on a budget or look for ways to increase income.
Alternatives to a cash advance
Before you take a cash advance, consider these lower-cost options. If you need cash for an emergency, a personal loan from a bank or credit union usually charges less interest than a credit card cash advance. If you have a 401(k), some plans allow you to borrow against your balance at a low rate. If you have a friend or family member who can lend you money, that is usually free.
If you need cash for a regular expense, a debit card withdrawal from your bank account costs nothing. If you do not have a bank account, a prepaid card or a check cashing service is cheaper than a credit card cash advance. If you are short on money regularly, a side income or a second job addresses the root problem rather than borrowing at high rates.
If you are considering a cash advance to pay off other debts, a balance transfer card with a 0 percent introductory rate might be cheaper, though you will still pay a balance transfer fee. A debt consolidation loan or a debt management plan through a nonprofit credit counselor are other options worth exploring.
Frequently Asked Questions
Can I use my credit card PIN at a store to get cash back?
No. Cash back at a store is a debit card feature. With a credit card, you can only get cash at an ATM or by using a balance transfer check. Some stores may let you use a credit card to buy a gift card and then return it for cash, but the issuer will treat this as a cash advance and charge you the fee and interest rate.
What happens if I do not pay back a cash advance?
The balance carries over to your next statement with interest accruing daily at your cash advance rate. If you miss a payment, you will be charged a late fee and your credit score will be damaged. The debt can also be sent to a collection agency if it goes unpaid for several months.
Is the cash advance fee the same as the interest rate?
No. The fee is a one-time charge (usually 3 to 5 percent) charged when you withdraw the cash. The interest rate is a daily charge that continues as long as you carry the balance. You pay both.
Can I get a cash advance on a secured credit card?
Yes, most secured cards allow cash advances, though the limit is usually lower than on unsecured cards. The fees and interest rates are the same. Check your card's terms to see if cash advances are available and what the limits are.
Does a cash advance hurt my credit score?
A cash advance itself does not hurt your score, but it does increase your credit utilization — the amount of your credit limit you are using. If your utilization goes above 30 percent, it can lower your score slightly. Paying the balance down will bring your score back up.