What a cash advance is and how it works
A cash advance is when you borrow money directly from your credit card issuer using an ATM, bank teller, or convenience check. The money goes into your bank account or your hand as physical cash, not toward a purchase. Your credit card company treats it as a loan against your available credit, and you pay it back like any other charge on your card.
Cash advances are different from regular purchases because they cost more. You pay interest when ready — there is no grace period like you get with a regular purchase. Most cards also charge a separate fee, usually 3 to 5 percent of the amount you withdraw, with a minimum fee of $5 to $10. A $200 cash advance might cost you $6 to $10 in fees alone, plus interest starting the day you take it out.
Your credit card company sets a cash advance limit, which is often lower than your overall credit limit. You might have a $5,000 credit limit but only a $1,500 cash advance limit. Check your card's terms or call the number on the back to find out what yours is.
Key Takeaways
- Cash advances charge a fee (usually 3 to 5 percent) and interest from day one, with no grace period like regular purchases have.
- You can get cash from an ATM using your PIN, from a bank teller with your card and ID, or by depositing a convenience check.
- Your cash advance limit is separate from your credit limit and is often much lower.
- Interest rates on cash advances are typically higher than rates on regular purchases from the same card.
- Paying off a cash advance should be your priority because the interest adds up quickly.
Getting cash from an ATM with your credit card
The fastest way to take out a cash advance is at an ATM. You will need your credit card and your PIN (personal identification number). If you do not have a PIN for your credit card, call the number on the back of your card and ask the issuer to set one up — this usually takes a few minutes over the phone.
Insert your card into the ATM, enter your PIN, and select "cash advance" or "withdraw cash" from the menu. The ATM will ask how much you want. Enter the amount and confirm. The machine will dispense the cash and print a receipt showing the amount withdrawn and any fee charged that day.
Not all ATMs accept credit cards for cash advances. Bank ATMs that belong to your card issuer (for example, Chase ATMs if you have a Chase card) almost always do. ATMs at other banks or independent machines may decline the transaction. If an ATM rejects your card, try a different machine or go to a bank branch instead.
Getting cash from a bank teller
You can also walk into any bank branch — it does not have to be your own bank — and ask the teller for a cash advance on your credit card. Bring your credit card and a photo ID. Tell the teller the amount you want to withdraw.
The teller will process the transaction at the counter, charge your fee, and hand you the cash. This method works even if you do not have a PIN set up on your card, though some banks may ask you to set one before they complete the transaction. You will get a receipt showing the withdrawal and the fee.
Bank tellers can usually process larger amounts than ATMs allow in a single transaction, so this is the better route if you need a big cash advance. Call ahead if you are withdrawing more than $1,000 to make sure the branch has enough cash on hand.
Using convenience checks
Some credit card issuers send you convenience checks in the mail — blank checks that draw directly from your credit card account. You can write one to yourself, deposit it into your bank account, and the amount becomes a cash advance on your card.
Convenience checks carry the same fees and interest rates as ATM or teller cash advances. They are slower than an ATM because you have to wait for the check to clear, which usually takes three to five business days. Use them only if you need the money in your bank account rather than in your hand, and you do not mind waiting.
If you have not received convenience checks and want them, call your card issuer and ask. Not all cards offer them, and some issuers have stopped sending them to reduce fraud risk.
Understanding the costs and interest rates
The fee for a cash advance is charged when ready and appears on your next statement. A typical fee is 3 to 5 percent of the amount withdrawn, with a minimum of $5 to $10. If you withdraw $500, expect to pay $15 to $25 in fees alone.
Interest on a cash advance is usually higher than the interest rate on regular purchases. Your card might charge 18 percent APR on purchases but 25 percent APR on cash advances. Interest starts accruing the moment you withdraw the cash — there is no grace period. If you take out $500 at 25 percent APR and pay it back after 30 days, you will owe roughly $10 in interest on top of the $15 to $25 fee.
The longer you carry a cash advance balance, the more expensive it becomes. A $500 advance at 25 percent APR costs about $125 in interest if you pay it back after a year. Always check your card's terms for the exact cash advance fee and interest rate, as these vary by card and issuer.
Paying back a cash advance
A cash advance is treated like any other balance on your credit card. Your monthly payment goes toward it along with any other charges. However, because the interest rate is higher and the fee is already charged, you should pay off a cash advance as fast as you can.
When you make a payment on your card, the money is usually applied first to the lowest-interest balance (your regular purchases) and last to the highest-interest balance (your cash advance). This means your cash advance sits and collects interest while you pay down cheaper debt. To avoid this, make a payment large enough to cover the cash advance in full, or call your issuer and ask them to explore your payment directly to the cash advance balance.
If you carry a cash advance balance month to month, it will show up on your credit report as revolving debt, which can lower your credit score. Paying it off quickly protects your score and saves you money on interest.
When a cash advance makes sense and when it does not
A cash advance should be a last resort, not a regular way to get cash. The fees and interest are too high for routine use. However, there are rare situations where it might be your only option: you need cash when ready, your bank is closed, and you have no other way to get money.
Do not use a cash advance to pay off other debt, cover everyday expenses, or fund a purchase you could make with your debit card or bank account. The cost will outweigh any benefit. If you find yourself regularly needing cash advances, that is a sign your budget needs attention or your emergency fund is too small.
If you have a choice between a cash advance and a personal loan from a bank or credit union, the personal loan will almost always be cheaper. Personal loans have lower interest rates and no upfront fees. Explore that option first if you have time.
Frequently Asked Questions
Can I get a cash advance if I do not have a PIN?
You can get a cash advance from a bank teller without a PIN, but you cannot use an ATM. Call your card issuer to set up a PIN, which usually takes a few minutes. Once it is set, you can use any ATM that accepts your card.
What is the difference between a cash advance and a balance transfer?
A cash advance gives you physical cash or money in your bank account. A balance transfer moves debt from one card to another. Cash advances charge higher interest and fees; balance transfers sometimes offer a low introductory rate for a set period. Use a balance transfer to move existing debt, and a cash advance only when you need actual cash.
Does a cash advance hurt my credit score?
A single cash advance does not hurt your score, but carrying a balance does. The higher your balance relative to your credit limit, the more your score drops. Pay off the cash advance quickly to minimize the damage.
Can I take out a cash advance if my card is maxed out?
No. A cash advance counts against your available credit, just like a purchase does. If you have no available credit left, you cannot take out a cash advance until you pay down your balance.
What happens if I cannot pay back a cash advance?
If you do not pay, the balance stays on your card and interest keeps accruing. Your credit score will drop, and the issuer may eventually send your account to a collection agency. Contact your card issuer when ready if you are struggling to pay — they may offer a hardship plan or lower interest rate.