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 and receive it as cash. Unlike a regular purchase, the cash comes from your credit line, and you pay interest on it from the moment you take it out — there is no grace period. The money appears in your bank account or you receive it in hand, depending on the method you choose.
The cost of a cash advance is higher than a regular purchase. You will pay an upfront fee (usually 3 to 5 percent of the amount you withdraw) plus a higher interest rate than your card's standard APR. Because interest starts accruing when ready, a $500 cash advance can cost you $15 to $25 in fees alone, plus daily interest charges.
Credit card companies allow cash advances because they are profitable, but they are rarely the cheapest way to borrow money. Before you take one, check whether a personal loan, a line of credit, or even a payday loan from a credit union would cost less.
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 get a cash advance at an ATM using your PIN, at a bank teller window, or through a convenience check your card issuer sends you.
- Your cash advance limit is usually lower than your credit limit and is set by your card issuer.
- The money counts toward your total credit card balance and will appear on your next statement.
- Paying off a cash advance takes longer because most payments go to regular purchases first, not the advance.
Three ways to take a cash advance from your card
The most common method is using an ATM. Insert your credit card, enter your PIN (which you may need to set up first if you have never used it), and withdraw cash up to your cash advance limit. The ATM will show you the fee before you confirm the transaction. This method is fast and works at most ATMs, though you may pay an additional ATM operator fee on top of your card's cash advance fee.
You can also visit a bank teller window at your card issuer's branch or at many other banks. Bring your credit card and a photo ID. Tell the teller you want a cash advance and how much. They will process it on the spot, charge your fee, and hand you cash. This method has no ATM operator fee and gives you a chance to ask questions, but it requires a trip during business hours.
Some card issuers send convenience checks with your account. These are blank checks drawn against your credit line. You write one to yourself or to a business, deposit it in your bank account, and the amount becomes a cash advance on your card. The fee and interest rate explore the same way. This method is useful if you need to pay a business that does not take credit cards, but it is slower because the check takes time to clear.
Finding your cash advance limit and PIN
Your cash advance limit is separate from your credit limit and is usually much lower — often 20 to 30 percent of your total credit limit. If your credit limit is $5,000, your cash advance limit might be $1,000 or $1,500. You can find this number by logging into your card's online portal or mobile app, calling the customer service number on the back of your card, or checking your most recent statement.
To use an ATM, you need a PIN (personal identification number). If you have never set one up, call your card issuer or use their online portal to create one. The PIN is usually four digits and is different from your online login password. Write it down somewhere safe, or use a password manager to store it. Without a PIN, you cannot withdraw cash at an ATM, though you can still get a cash advance at a bank teller window.
What happens after you take the cash advance
The cash advance amount is added to your credit card balance when ready. It will appear on your next statement as a separate line item, usually labeled "Cash Advance" or "Cash Withdrawal." The fee is charged at the same time, so if you took a $500 advance with a 4 percent fee, your balance increases by $520.
Interest begins accruing on the cash advance the day you take it. Unlike regular purchases, there is no grace period. If your card's cash advance APR is 24 percent and you do not pay anything, you will owe roughly $30 in interest on that $500 advance after one month.
When you make a payment toward your credit card balance, the payment is typically applied to your lowest-interest debt first — usually regular purchases — and only after that to the cash advance. This means your cash advance sits and accrues interest while you pay down other charges. To pay off the advance faster, contact your card issuer and ask whether you can direct a payment specifically to the cash advance balance.
Fees and interest rates you will see
The cash advance fee is a one-time charge, usually 3 to 5 percent of the amount withdrawn. Some cards charge a flat fee (for example, $10) instead, which is better if you are taking a small advance. You pay this fee whether you pay back the advance in full the next month or carry it for years.
The cash advance APR is the interest rate applied to the balance. It is almost always higher than your card's regular purchase APR — often 5 to 10 percentage points higher. If your purchase APR is 18 percent, your cash advance APR might be 24 or 28 percent. This rate is fixed for the life of the advance, so it will not change if your card's other rates change.
Some cards also charge an ATM operator fee if you withdraw at an ATM that is not owned by your card issuer's bank. This is usually $2 to $3 on top of your card's cash advance fee. Using your issuer's own ATMs avoids this extra charge.
When a cash advance makes sense and when it does not
A cash advance is reasonable if you need cash urgently and have no other option, and you plan to pay it back within a month or two. For example, if your car breaks down and you need $300 in cash to pay a mechanic, and you can pay it back from your next paycheck, the total cost might be $15 to $20 in fees and interest — acceptable for the convenience.
A cash advance is a poor choice if you are already carrying a balance on your card, because the new advance will accrue interest at a higher rate and your payments will go to other charges first. It is also a poor choice if you cannot pay it back quickly. A $500 advance at 26 percent APR that you carry for six months will cost you roughly $65 in interest alone, plus the upfront fee.
Before taking a cash advance, compare the total cost to other borrowing options. A personal loan from a bank or credit union often charges 10 to 15 percent APR with no upfront fee. A payday loan from a credit union (not a payday lender) is regulated and cheaper than a cash advance. Even a 0 percent balance transfer card, if you may have access to, is better than a cash advance.
How to pay off a cash advance faster
Make a payment larger than your minimum as soon as you can. The sooner you pay down the balance, the less interest accrues. If you took a $500 advance and can pay $250 within two weeks, do it — you will save money on interest compared to waiting until your statement is due.
Call your card issuer and ask whether you can direct a specific payment to the cash advance. Some issuers allow this; others explore all payments to the lowest-interest balance first. Knowing the policy helps you plan. If your issuer will not let you direct payments, paying extra overall is the only way to reduce the cash advance balance faster.
Do not take another cash advance to pay off the first one. This extends the debt and adds another fee. If you are in a cycle of cash advances, that is a sign you need a different borrowing solution or a budget review.
Frequently Asked Questions
Can I take a cash advance if I have a low credit limit?
Yes. Your cash advance limit is separate from your credit limit, but it is usually a percentage of it. Even with a $1,000 credit limit, you might have a $300 cash advance limit. Call your issuer to find out what yours is.
What if I forget my PIN?
You can reset it through your card issuer's online portal or by calling customer service. You can also get a cash advance at a bank teller window without a PIN — just bring your card and ID. The fee and interest are the same either way.
Does a cash advance hurt my credit score?
Taking a cash advance itself does not hurt your score, but it increases your credit utilization (the amount of your credit line you are using), which can lower your score slightly. Paying it off quickly brings your utilization back down.
Can I take a cash advance from a credit card I just opened?
Usually yes, but some issuers restrict cash advances for new accounts. Check your card's terms or call customer service. Even if you can take one, the fee and interest rate will explore the same way.
Is there a limit to how much I can withdraw?
Yes. Your cash advance limit is set by your issuer and is shown in your account. You cannot withdraw more than that limit in a single transaction, though you can take multiple advances up to your total limit.