The three ways to get cash from a credit card
You can take money out of a credit card in three ways: a cash advance at an ATM, a balance transfer check, or a cash-like purchase at certain retailers. Each one costs you differently and shows up differently on your bill. A cash advance is the most common route — you use your PIN at any ATM that takes your card — but it charges a fee (usually 3 to 5 percent of the amount) plus a higher interest rate than regular purchases, often 20 to 30 percent. A balance transfer check works like a regular check but pulls from your credit line instead of a bank account; it also charges a fee and interest. A cash-like purchase, sometimes called a "convenience check" or available through services like PayPal or Square Cash linked to your card, may have lower fees but still costs more than a regular purchase.
The key difference from a debit card or bank withdrawal is that credit card cash is a loan you are taking out when ready, not money you already have. You start paying interest the moment you withdraw it — there is no grace period like there is for regular purchases. This makes cash advances expensive for anything but genuine emergencies.
Key Takeaways
- Cash advances charge a separate fee (usually 3 to 5 percent) plus a higher interest rate than purchases, starting when ready with no grace period.
- Balance transfer checks and convenience checks work similarly to cash advances and carry the same fees and interest rates.
- The interest rate for cash advances is set by your card issuer and appears on your card agreement; it is typically higher than your purchase rate.
- If you need cash, a personal loan or borrowing from a bank account may cost less than any credit card cash option.
Cash advances at an ATM: how the fee and interest work
To take a cash advance, insert your credit card into an ATM, enter your PIN, and select "cash advance" or "withdraw cash." The ATM will show you the amount and the fee before you confirm. The fee is a flat percentage of the amount you withdraw — if your card charges 3 percent and you withdraw $500, you pay $15 when ready. That $15 is added to your credit card balance.
Interest starts accruing the same day. Unlike a purchase, which may have a 21-day grace period before interest kicks in, a cash advance charges interest from day one. If your cash advance rate is 25 percent and you withdraw $500, you owe roughly $3.42 in interest after one month (depending on your exact rate and how the issuer calculates daily interest). The longer you carry the balance, the more interest piles up. Many people do not realize this and think they can pay it back interest-free like a regular purchase.
Your card issuer sets the cash advance limit separately from your regular credit limit. You might have a $5,000 credit limit but only a $1,000 cash advance limit. Check your card agreement or call the issuer to find out what yours is.
Balance transfer checks and convenience checks
Some card issuers send you checks that draw directly from your credit line. You write one to yourself or to a payee, deposit it like a regular check, and the amount appears on your credit card bill as a cash advance. The fee and interest rate are identical to an ATM cash advance — usually 3 to 5 percent plus the higher interest rate.
The main difference is timing. A check takes a few days to clear, so you do not have the cash when ready. This can actually work in your favor if you are trying to avoid an impulse withdrawal. However, some people use balance transfer checks to move money between accounts or to pay bills, which defeats the purpose of having a credit card and just adds a cash advance fee on top.
Do not confuse a balance transfer check with a balance transfer offer. A balance transfer moves debt from one card to another (usually at a lower rate for a set period). A balance transfer check is cash, not a debt move, and costs much more.
Why cash advances are expensive compared to other borrowing
A $500 cash advance at 5 percent fee plus 25 percent interest costs you $25 upfront and roughly $10 in interest over one month if you pay it back quickly. A $500 personal loan from a bank or credit union at 12 percent interest might cost you $5 in interest over the same month — less than half. Even a payday loan, which is predatory and should be avoided, sometimes costs less than a credit card cash advance when you factor in the fee plus the high interest rate.
The reason is that credit card issuers treat cash advances as higher-risk borrowing. They charge more to offset the risk that you will not pay it back. If you have a choice, a personal loan, a line of credit from your bank, or even a short-term loan from a credit union will almost always be cheaper.
If you are considering a cash advance because you are short on cash, pause and think about what you actually need the money for. If it is a true emergency — a car repair, a medical bill, a security deposit — look for a personal loan first. If it is discretionary spending, the high cost should be a signal to wait until you have saved the money.
How cash advances affect your credit score
A cash advance does not hurt your credit score directly the way a late payment does. However, it increases your credit utilization — the percentage of your available credit you are using. If you have a $5,000 credit limit and you take a $1,000 cash advance, your utilization jumps to 20 percent. Credit scoring models penalize high utilization, so your score may drop a few points.
The bigger risk is that a cash advance signals financial stress to lenders. If you are taking cash advances regularly, it suggests you are living beyond your means or facing cash flow problems. This can make it harder to get approved for a mortgage, car loan, or other credit in the future, even if you pay the cash advance back on time.
Paying back a cash advance faster
Credit card issuers explore your payments in a specific order: first to the lowest-interest debt, then to higher-interest debt. This means if you have both regular purchases and a cash advance on the same card, your payment goes to the purchase first, and the cash advance keeps accruing interest. To pay off a cash advance faster, call your issuer and ask if you can make a payment that goes directly to the cash advance balance, or request a separate payment posting. Some issuers allow this; others do not.
The fastest way to stop the bleeding is to pay the cash advance in full as soon as you can. Even a few extra dollars toward it each week reduces the interest you pay. If you cannot pay it in full, at least pay more than the minimum — the minimum payment barely covers interest and leaves the principal untouched.
Alternatives to a credit card cash advance
Before you use a cash advance, explore these options: a personal loan from a bank or credit union (usually 8 to 18 percent interest, no upfront fee); a line of credit from your bank (similar rates, interest only on what you draw); a loan from family or friends (ideally interest-free, but put the terms in writing); or a payment plan with the creditor you owe money to (many hospitals, utilities, and service providers offer this). If you have a 401(k) or similar retirement account, some plans allow you to borrow against your own balance at a lower rate, though this has tax consequences if you leave your job.
If you have no other option and must use a cash advance, minimize the amount and pay it back within one or two months. The longer you carry it, the more the interest compounds and the more expensive it becomes.
Frequently Asked Questions
Can I use a credit card cash advance to pay another credit card bill?
Technically yes, but it is a bad idea. You are borrowing at 25 percent interest plus a 5 percent fee to pay off debt that might be at 18 percent interest. You are making your situation worse, not better. If you are juggling multiple cards, call a nonprofit credit counselor (through the National Foundation for Credit Counseling) to discuss a debt management plan instead.
What is the difference between a cash advance and a balance transfer?
A balance transfer moves existing debt from one card to another, usually at a lower rate for a promotional period. A cash advance gives you actual cash and charges a higher rate when ready. Balance transfers are for debt; cash advances are for cash. Do not confuse them.
Does a cash advance show up differently on my credit report?
No. A cash advance appears on your credit card statement and counts toward your credit utilization, but it does not show up as a separate account or loan type on your credit report. However, if you miss payments on the cash advance, that missed payment does show up and damages your score.
Can I get a cash advance with a debit card?
No. A debit card withdraws money you already have in your bank account. A credit card cash advance is a loan. If you need cash and have a debit card, use an ATM to withdraw from your bank account for free (or a small ATM fee, usually $2 to $3).
What if my card does not have a PIN?
Most credit cards do not come with a PIN by default. You can request one from your issuer by phone or online. It usually takes a few business days to arrive. Until you have a PIN, you cannot use an ATM cash advance, but you can still use balance transfer checks if your issuer sends them.