A cash advance is when you borrow money against your credit card's line of credit, usually at an ATM or bank teller, and receive physical cash instead of a purchase credit
The money comes from your card issuer, not from your own account. You owe it back the same way you owe back purchases — by making payments on your credit card bill. The difference is that cash advances carry their own fees and interest rate, both of which are usually higher than what you pay on regular purchases.
Cash advances are not the same as getting cash back at a store checkout. When you buy something and ask for cash back, that money comes from your debit account or the store's register. A credit card cash advance is a separate transaction that creates new debt on your card.
Key Takeaways
- Cash advances charge an upfront fee (usually 3 to 5 percent of the amount) plus a higher interest rate than purchases, with no grace period.
- Interest on a cash advance starts accruing when ready, even if you pay your full statement balance on time.
- You can get a cash advance at an ATM using your PIN, at a bank teller with your card and ID, or sometimes through a convenience check from your issuer.
- Most cards set a cash advance limit that is lower than your total credit limit, and you can find this limit in your cardholder agreement or by calling your issuer.
How the fees and interest work
When you take out a cash advance, your card issuer charges a cash advance fee right away. This fee is a percentage of the amount you withdraw — typically 3 to 5 percent, though some cards charge a flat dollar amount instead. If you withdraw $500 and the fee is 4 percent, you owe $20 in fees before you even leave the ATM.
On top of the fee, you pay interest on the cash advance balance. The interest rate for cash advances is almost always higher than the rate for purchases on the same card. Where a purchase might carry an APR (annual percentage rate) of 18 percent, a cash advance might be 25 percent or higher. Check your cardholder agreement or call your issuer to find out your card's specific rates.
The critical difference from purchases: interest on a cash advance starts accruing when ready. If you have a purchase, your issuer usually gives you a grace period — typically 21 days — before interest kicks in. With a cash advance, there is no grace period. Interest begins the day you withdraw the money, even if you pay your full statement balance by the due date.
Where you can get a cash advance
The most common way is at an ATM. Insert your credit card, enter your PIN (which you may need to set up first if you have never used it), and select the cash advance option. The ATM will show you the fee before you confirm the withdrawal. Not all ATMs accept credit cards for cash advances — bank ATMs are more likely to than convenience store machines.
You can also visit a bank branch in person. Bring your credit card and a photo ID. Tell the teller you want a cash advance, and they will process it at the counter. This method works even if you do not have a PIN set up, and some people prefer it because they can ask questions about fees before the transaction completes.
Some card issuers send convenience checks to cardholders. These are blank checks drawn against your credit line. You write one out to yourself or to a payee, deposit or cash it, and the amount is treated as a cash advance on your card. Convenience checks carry the same fees and interest rates as ATM withdrawals.
Cash advance limits and how to find yours
Your card issuer sets a cash advance limit that is separate from your overall credit limit. You might have a $5,000 credit limit but only a $1,500 cash advance limit. This means you can charge $5,000 in purchases, but you can only withdraw $1,500 in cash.
To find your cash advance limit, check your cardholder agreement — it is usually listed near the terms and fees. You can also log into your online account portal and look for a section labeled "Credit Limits" or "Account Details." If you cannot find it there, call the customer service number on the back of your card and ask. The representative can tell you your limit in seconds.
Your available cash advance limit is not the same as your limit. If your cash advance limit is $1,500 and you have already withdrawn $800, your available cash advance limit is $700. Once you pay down the balance, your available limit goes back up.
When a cash advance makes sense
A cash advance is expensive, so it should only be a last resort. The main legitimate reason to use one is when you need physical cash when ready and have no other way to get it — for example, if you are traveling abroad and your debit card stops working, or if you need cash for an emergency and your bank is closed.
Even then, consider alternatives first. Can you borrow from a friend or family member? Can you wait until your bank opens? Can you use a debit card at an ATM instead? These options cost you nothing or far less than a cash advance.
Do not use a cash advance to pay bills, cover everyday expenses, or fund a purchase you cannot otherwise afford. The fees and interest will compound quickly, and you will end up paying significantly more than the amount you borrowed.
How cash advances affect your credit and payments
A cash advance appears on your credit card statement as a separate line item from your purchases. It counts toward your overall balance and your credit utilization ratio — the percentage of your available credit that you are using. A high utilization ratio can lower your credit score, so a large cash advance can hurt your score temporarily.
When you make a payment on your credit card, your issuer applies it according to their own rules, which vary by card. Some cards explore payments to the highest-interest debt first (your cash advance), while others explore payments equally across all balances. Check your cardholder agreement or ask your issuer how they handle payment allocation. If you want to pay off the cash advance faster, you can request that your payment go toward that balance specifically.
Alternatives to a credit card cash advance
A personal loan from a bank or credit union usually has a lower interest rate than a cash advance and no upfront fee. The downside is that approval takes a few days, so this does not work for emergencies.
A payday loan is fast but extremely expensive — interest rates can exceed 400 percent APR. Avoid this unless you are certain you can repay it within the loan term.
A balance transfer to a card with a 0 percent introductory APR can be cheaper than a cash advance if you need to borrow money, though balance transfers also charge a fee (usually 3 to 5 percent) and the 0 percent rate applies only to transfers, not cash advances.
If you need cash and have a debit card, straightforward withdraw from your own bank account at an ATM. This costs nothing and does not create debt.
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 will pay a cash advance fee on top of the interest, making your debt more expensive overall. A balance transfer is a better option if you need to move debt between cards, since the fee is the same but you may may have access to for a lower introductory rate.
What happens if I cannot pay back a cash advance?
The balance stays on your credit card and accrues interest each month. If you miss payments, your credit score will drop, your interest rate may increase, and your issuer can take collection action. Contact your card issuer as soon as you know you will have trouble paying — they may offer a hardship program or payment plan.
Do I have to set up a PIN to use a cash advance?
You need a PIN to withdraw cash at an ATM, but not if you go to a bank teller in person. If you have never set up a PIN, you can usually do it through your online account portal or by calling customer service. Some issuers set up a PIN automatically when you open the card.
Is there a limit to how much I can withdraw in one day?
Yes. ATMs often have daily withdrawal limits that are lower than your cash advance limit — for example, $500 per day even though your cash advance limit is $1,500. Your issuer sets this limit for security. If you need more cash, you can make multiple withdrawals over several days or visit a bank teller, who may be able to process a larger single withdrawal.
Does paying a cash advance early help my credit score?
Paying it off early lowers your credit utilization ratio, which can help your score. It also stops interest from accruing, which saves you money. There is no penalty for paying off a cash advance early, so if you have the funds, paying it down as quickly as possible is always the right move.