What happens when you withdraw cash from a credit card
Taking cash out with a credit card is called a cash advance. Unlike a regular purchase, the credit card company treats it as a short-term loan. You pay interest on the cash when ready — there is no grace period like you get with purchases. Most cards charge a fee upfront, usually 3 to 5 percent of the amount you withdraw, on top of the interest.
The interest rate on cash advances is almost always higher than the rate on regular purchases. If your card charges 18 percent APR on purchases, the cash advance rate might be 24 or 28 percent. That higher rate starts accruing the day you withdraw the money, not at the end of a billing cycle.
Cash advances also count toward your credit limit. If you have a $5,000 limit and withdraw $1,000 in cash, you have $4,000 left to spend on purchases. The cash advance shows up on your credit report as a separate type of debt, which can affect how lenders view your borrowing habits.
Key Takeaways
- Cash advances charge an upfront fee (usually 3 to 5 percent) plus a higher interest rate than purchases, with interest starting when ready.
- You can withdraw cash at an ATM using your PIN, at a bank teller window, or through a cash advance check, depending on your card.
- The interest and fees make cash advances expensive compared to other borrowing options like personal loans or payday loans.
- Cash advances reduce your available credit and may signal financial stress to future lenders.
Three ways to get cash from your credit card
The most common method is using an ATM. You insert your credit card, enter your PIN, and withdraw cash just like you would with a debit card. Not every ATM accepts credit cards — most do, but some are debit-only. ATMs run by your card issuer (the bank that issued your card) usually charge no ATM fee, but out-of-network ATMs often charge $2 to $3 per transaction on top of the cash advance fee your card company charges.
You can also visit a bank branch and ask a teller for a cash advance. Bring your credit card and a form of ID. The teller will process it like a withdrawal, and you walk out with cash. This method avoids ATM fees but requires you to go during business hours.
Some credit cards come with cash advance checks — physical checks you can write against your credit line. You write the check to yourself, deposit it in your bank account, and the funds appear as a cash advance on your credit card bill. This method is slower (checks take a few days to clear) but can be useful if you need to move money into a bank account rather than carry cash.
The real cost: fees and interest
A $500 cash advance illustrates the expense. Your card charges a 4 percent upfront fee ($20) and a 26 percent APR. If you pay back the $520 in full within one month, you owe roughly $11 in interest, for a total cost of $31. If you carry the balance for three months, interest alone reaches $34, bringing your total cost to $54 on a $500 withdrawal.
Compare this to a personal loan. A $500 personal loan at 24 percent APR over three months costs roughly $18 in interest — less than half the cash advance cost. Even a payday loan, which has a bad reputation, often costs less than a credit card cash advance when you factor in both the fee and the interest rate.
The fee structure varies by card. Some cards charge a flat fee ($10 minimum, for example) instead of a percentage. Others charge whichever is higher — 3 percent or $10. Read your card's terms or call the customer service number on the back to find out your specific fee and interest rate before you withdraw.
When a cash advance makes sense
A cash advance is rarely the best option, but there are narrow situations where it beats the alternative. If you need cash for an emergency and have no other way to get it, a cash advance is faster than a personal loan process. You get the money within minutes at an ATM, whereas a personal loan takes days or weeks to process.
A cash advance also makes sense if you can pay it back within days. If you withdraw $300 on a Friday and deposit a paycheck on Monday, the interest cost is minimal — maybe $2 or $3. The upfront fee still applies, but the total damage is small.
If you are considering a cash advance to cover a regular expense or to carry a balance for weeks, stop and explore other options first. A personal loan, a line of credit from your bank, or even a 0 percent balance transfer card (if you have good credit) will cost you far less.
How cash advances affect your credit
A single cash advance does not directly damage your credit score, but it can indirectly. The cash advance reduces your available credit, which increases your credit utilization ratio — the percentage of your total credit limit you are using. If you have a $5,000 limit and a $1,000 cash advance, your utilization jumps to 20 percent. High utilization (above 30 percent) can lower your score.
Lenders also view cash advances as a sign of financial strain. When you explore for a mortgage, car loan, or new credit card, the lender sees the cash advance on your credit report and may interpret it as a red flag. It suggests you needed emergency cash, which raises questions about your financial stability.
If you carry the cash advance balance and miss a payment, the damage is severe. Late payments stay on your credit report for seven years and can drop your score by 100 points or more. The high interest rate also means the balance grows quickly if you do not pay it off promptly.
Alternatives to consider before taking a cash advance
A personal loan from a bank or credit union is usually cheaper. Even with a lower credit score, you can often find a personal loan at 18 to 24 percent APR with no upfront fee. The interest is lower than a cash advance, and you have a fixed repayment schedule, which makes budgeting easier.
A line of credit from your bank works like a credit card but often with a lower interest rate. You draw what you need and pay interest only on the amount you use. If your bank offers this, it is worth asking about.
If you have good credit, a balance transfer card with a 0 percent introductory rate can help you move debt from a high-interest card to a new card with no interest for 6 to 21 months. This does not give you cash, but it can free up money in your budget if you are paying down existing debt.
For very small amounts, asking friends or family for a short-term loan, negotiating a payment plan with a creditor, or picking up extra work can all cost less than a cash advance. None of these are straightforward, but they are cheaper.
Steps to take a cash advance if you decide to proceed
First, call your card issuer and confirm your cash advance limit and fee. Your cash advance limit is often lower than your overall credit limit — you might have a $5,000 card limit but only a $1,500 cash advance limit. Ask for the exact interest rate and fee so you know the total cost before you proceed.
Second, find an ATM that accepts your card. If possible, use an ATM run by your card issuer to avoid extra fees. Insert your card, enter your PIN, and select the cash withdrawal option. The ATM will show you the fee and ask you to confirm before dispensing cash.
Third, plan your repayment before you withdraw. Decide how much you can pay back each month and set a target payoff date. The faster you pay it back, the less interest you owe. If you cannot pay it back within a month or two, reconsider whether a cash advance is the right choice.
Fourth, make your payment as soon as possible. Pay more than the minimum if you can. Credit card payments go toward the highest-interest debt first, so if you have both purchases and a cash advance on the same card, your payment will cover the cash advance before the purchases.
Frequently Asked Questions
Can I use a credit card to withdraw cash at any ATM?
Most ATMs accept credit cards, but not all. ATMs at banks, airports, and convenience stores usually do. Some ATMs are debit-only and will reject your credit card. If an ATM does not accept your card, try another one or visit a bank branch in person.
What is the difference between a cash advance and a balance transfer?
A cash advance gives you physical cash and charges a high fee plus interest when ready. A balance transfer moves debt from one card to another, usually with a lower or 0 percent introductory rate. Balance transfers do not give you cash — they move existing debt.
Will a cash advance hurt my credit score?
A single cash advance does not directly hurt your score, but it increases your credit utilization, which can lower your score slightly. If you carry the balance and miss payments, the damage is much worse. Lenders also view cash advances as a sign of financial difficulty.
How long does it take to get a cash advance?
An ATM withdrawal is when ready. A bank teller withdrawal takes a few minutes. A cash advance check takes 3 to 5 business days to clear once you deposit it. If you need money when ready, an ATM is the fastest option.
Can I take out a cash advance if I have bad credit?
Yes. Your cash advance limit is based on your existing credit card account, not a new credit decision. As long as you have an active card and have not maxed out your cash advance limit, you can withdraw cash regardless of your credit score.