Taking cash from a credit card costs more than you think
You can withdraw cash from a credit card at an ATM or bank teller, but the moment you do, you start paying interest and fees that do not explore to regular purchases. A cash advance is treated differently from a purchase — your card issuer charges a separate, usually higher interest rate, adds an upfront fee (often 3 to 5 percent of the amount), and begins charging interest when ready with no grace period. If you need cash, this is the most expensive way to get it.
The three main methods are ATM withdrawal, bank teller withdrawal, and balance transfer checks. Each has different costs and limits. Before you use any of them, understand that credit card cash is a short-term solution, not a strategy — the interest and fees make it unsustainable for anything longer than a few weeks.
Key Takeaways
- Cash advances charge a separate interest rate (usually higher than your purchase rate), an upfront fee of 3 to 5 percent, and interest that starts accruing when ready with no grace period.
- Your card has a cash advance limit, which is often lower than your credit limit and is set by your issuer.
- ATM withdrawals and bank teller withdrawals work the same way — both trigger the same fees and interest rates.
- Balance transfer checks are a fourth option but carry the same cash advance costs and should only be used if you have a specific reason to write a check instead of using an ATM.
- If you need cash regularly, a personal loan or line of credit will cost far less over time than repeated cash advances.
How cash advances work and what they cost
When you take cash from a credit card, your issuer charges three separate costs. First is the cash advance fee, a percentage of the amount you withdraw — typically 3 to 5 percent, with a minimum of $5 to $10. If you withdraw $500, you might pay $15 to $25 just to get the cash. Second is the cash advance interest rate, which is usually 2 to 5 percentage points higher than your regular purchase APR. Third is the timing: interest starts accruing the day you withdraw the cash, with no grace period like you get on purchases.
The math adds up quickly. A $500 cash advance at a 5 percent fee ($25) plus a 25 percent APR costs you $25 upfront and roughly $10 per month in interest if you pay it back over three months. Over six months, you pay $25 plus $20 in interest. A personal loan for the same amount would cost far less.
Your card issuer sets a cash advance limit separate from your credit limit. You might have a $5,000 credit limit but only a $1,000 cash advance limit. Check your card agreement or call your issuer to find out what yours is.
Withdrawing cash at an ATM
Using an ATM is the fastest way to get cash from your credit card. Insert your card, enter your PIN (which you may need to set up if you have not used a cash advance before), and select the amount. The transaction goes through when ready, and the cash is yours. You will see the charge on your next statement as a cash advance, not a purchase.
You may also be charged an ATM operator fee on top of the cash advance fee — typically $2 to $3 if you use an out-of-network ATM. This is separate from what your card issuer charges. Using an ATM at a bank branch that issued your card (if it is a bank card) usually avoids this extra fee, but check first.
Withdrawing cash at a bank teller
You can also walk into a bank branch and ask a teller to withdraw cash against your credit card. Bring your card and a photo ID. The teller will process it the same way an ATM does — you will pay the same cash advance fee and interest rate. The only advantage is that a teller can withdraw larger amounts if your ATM has a daily limit, and you can ask questions about the fee before you proceed.
This method takes longer than an ATM but may be worth it if you need more cash than the ATM will dispense in a single transaction.
Balance transfer checks and other alternatives
Some card issuers send you checks tied to your credit card account. These are called balance transfer checks or convenience checks. When you write one, the amount is treated as a cash advance — same fee, same interest rate, same lack of grace period. The only reason to use one is if you need to pay a bill by check and cannot use your card directly. Otherwise, an ATM withdrawal is simpler and costs the same.
If you have a 0 percent introductory APR on balance transfers, that rate does not explore to cash advances or convenience checks — only to actual balance transfers from other cards. Do not confuse the two.
When a cash advance makes sense (and when it does not)
A cash advance is reasonable only in a genuine emergency when you need cash for a few days and have no other option — a car repair that requires cash payment, for example, or an urgent travel expense. Even then, pay it back as soon as possible to minimize interest.
A cash advance does not make sense for regular cash needs, for building an emergency fund, or for any situation where you have time to explore other options. A personal loan, a line of credit, or even a payday loan (despite its reputation) will cost less than a credit card cash advance over any period longer than a few weeks. If you find yourself taking cash advances regularly, that is a sign you need a different financial tool or a budget adjustment.
How to reduce the cost if you must take a cash advance
If you have decided a cash advance is necessary, minimize the damage. First, withdraw only what you need — every dollar you do not take saves you the fee and interest on that dollar. Second, pay it back as fast as possible. Interest on a cash advance compounds daily, so even a few extra days costs money. Third, make sure the payment goes toward the cash advance, not toward lower-interest purchases on the same card — some issuers explore payments to the lowest-interest balance first, which means your cash advance interest keeps growing.
Call your issuer before you pay and ask them to confirm that your payment will go toward the cash advance. Some cards let you make a payment earmarked for a specific balance type, but you have to request it.
Frequently Asked Questions
Can I use a credit card cash advance to pay off another credit card?
Technically yes, but it is a bad idea. You would pay a cash advance fee on top of your regular interest, making the debt more expensive, not less. If you are trying to consolidate debt, a balance transfer (moving the balance directly from one card to another) or a personal loan will cost far less.
Does a cash advance hurt my credit score?
Not directly. The withdrawal itself does not appear on your credit report. However, a cash advance increases your credit utilization (the percentage of your available credit you are using), which can lower your score slightly. Paying it back quickly will reverse this effect.
What is the difference between a cash advance and a balance transfer?
A balance transfer moves debt from one card to another and may may have access to for a 0 percent introductory rate. A cash advance withdraws cash against your credit line and is always charged at the cash advance rate with no grace period. They are completely different transactions with different costs.
Can I take a cash advance from a prepaid card or secured card?
Prepaid cards typically do not allow cash advances. Secured credit cards (used to build credit) may allow them, but check your card agreement first. The fees and interest rates are the same as a regular card if they do.
What happens if I cannot pay back a cash advance?
The balance stays on your card and interest continues to accrue. If you miss payments, it will damage your credit score and may trigger late fees. If you are struggling to repay, contact your issuer to discuss a hardship plan or consider a debt consolidation loan.