A cash advance is when you borrow money against your credit card's credit limit and withdraw it as cash
Unlike a regular purchase, a cash advance lets you take physical money from an ATM, bank teller, or convenience store using your credit card. The amount you withdraw counts against your available credit, just like a purchase does. But cash advances come with their own fees and interest rates — usually higher than what you pay on regular purchases — and interest starts accruing when ready, with no grace period.
You can get a cash advance at any ATM that displays your card's logo, at your bank's teller window, or sometimes at a convenience store or casino cage. The process is straightforward: insert your card, enter your PIN, and withdraw the amount you need. The transaction posts to your account within one or two business days.
Key Takeaways
- Cash advances charge a separate fee (usually 3 to 5 percent of the amount withdrawn) plus a higher interest rate than purchases, with no grace period.
- Interest on a cash advance begins accruing the day you withdraw the money, not at the end of your billing cycle like a purchase.
- The amount you can withdraw is limited by your cash advance limit, which is often lower than your total credit limit and set by your card issuer.
- Paying back a cash advance should be a priority because the interest cost adds up quickly, especially on larger amounts.
How cash advance fees and interest rates work
When you take a cash advance, your card issuer charges a cash advance fee upfront. This fee is usually a percentage of the amount withdrawn — typically 3 to 5 percent — with a minimum dollar amount (often $5 to $10). So if you withdraw $500, you might pay $15 to $25 in fees alone.
On top of the fee, you pay interest at a rate that is almost always higher than your purchase APR. While a purchase might carry an APR of 18 percent, a cash advance might be 25 percent or higher. The critical difference: interest on a cash advance starts the moment you withdraw the money. There is no grace period. A purchase made on day one of your billing cycle might not accrue interest until day 21 or later, but a cash advance accrues interest from day one.
Because of these costs, a $500 cash advance can easily cost $50 to $100 in fees and interest over a few months if you do not pay it back quickly.
Your cash advance limit versus your credit limit
Your card issuer sets a separate cash advance limit that is usually much lower than your total credit limit. If your credit limit is $5,000, your cash advance limit might be $1,000 or $1,500. This limit is set by the card issuer based on your creditworthiness and account history, and you cannot change it yourself.
You can find your cash advance limit by checking your card's terms and conditions, calling the customer service number on the back of your card, or logging into your online account. Some card issuers display it in your account dashboard. If you try to withdraw more than your limit, the ATM will decline the transaction.
Where you can get a cash advance
The most common place to get a cash advance is an ATM. You can use any ATM that displays your card's logo — Visa, Mastercard, American Express, or Discover — though using an out-of-network ATM may add an additional ATM fee on top of the cash advance fee.
You can also visit your bank's teller window and ask for a cash advance. The teller will process it the same way an ATM does, and you will pay the same fees. Some casinos, convenience stores, and other merchants also offer cash advances at the register, though these often charge additional fees beyond what your card issuer charges.
Avoid getting a cash advance from a convenience store or casino unless you have no other option. The combined fees — your card's cash advance fee plus the merchant's fee — can easily reach 8 to 10 percent of the amount withdrawn.
How a cash advance affects your credit and account
A cash advance counts as a debt on your credit card account, so it reduces your available credit when ready. If you have a $5,000 limit and take a $500 cash advance, your available credit drops to $4,500. This affects your credit utilization ratio — the percentage of your available credit you are using — which is a factor in your credit score.
The cash advance itself does not appear separately on your credit report. Instead, it is part of your overall credit card balance. However, if you carry the cash advance balance and miss a payment, that missed payment will show on your credit report and damage your score.
Because cash advances accrue interest so quickly and at such high rates, carrying a balance is expensive. Paying off a cash advance within a month or two is much cheaper than letting it sit for several months.
When a cash advance might make sense
A cash advance is rarely the best way to borrow money, but there are situations where it might be your only option. If you need cash urgently and have no other way to get it — no savings, no access to a personal loan, no friends or family who can lend — a short-term cash advance might be better than missing a bill payment or falling behind on rent.
The key is to treat it as a short-term solution and pay it back as fast as you can. If you can pay back a $300 cash advance within two weeks, the total cost might be $15 to $20 in fees and interest — painful but manageable. If you carry it for six months, the interest alone could exceed $50.
Do not use a cash advance to fund a purchase you could make with your card instead. The interest rate and fees make it far more expensive than a regular purchase.
Alternatives to a cash advance
Before you take a cash advance, consider other options. If you need cash and have a bank account, a personal loan from your bank or a credit union is usually cheaper than a cash advance. Personal loans typically charge 6 to 36 percent APR depending on your credit, with no upfront fee, and you have a fixed repayment schedule.
If you need a small amount of cash, ask friends or family to lend you money. If you have a savings account, withdrawing from savings costs nothing and does not create debt. If you have a 401(k) or similar retirement account, some plans allow you to borrow against your balance at a low interest rate, though this comes with its own risks and rules.
A payday loan is another option, but payday loans often charge even higher fees and interest rates than cash advances, so they should be a last resort.
Frequently Asked Questions
Can I get a cash advance if my credit is bad?
Yes. Your cash advance limit is set by your card issuer and does not change based on your credit score. If you already have the card and have a cash advance limit, you can use it regardless of your current credit. However, if you are trying to open a new card specifically to get a cash advance, a low credit score may make approval harder.
What happens if I cannot pay back a cash advance?
The balance stays on your account and continues to accrue interest at your cash advance rate. If you miss a payment, it will show on your credit report and damage your score. Your card issuer may also increase your interest rate or close your account. Contact your card issuer as soon as you know you will have trouble paying — they may be able to work out a payment plan.
Is there a grace period on cash advances like there is on purchases?
No. Interest on a cash advance starts accruing the day you withdraw the money. There is no grace period, even if you pay your full balance by the due date. This is one of the biggest differences between a cash advance and a regular purchase.
Can I use a balance transfer to pay off a cash advance?
No. A balance transfer moves a balance from one card to another, but it does not explore to cash advances. Cash advances are treated separately and cannot be transferred. You have to pay off a cash advance with regular payments or by paying down your overall card balance.
Does taking a cash advance hurt my credit score?
Taking a cash advance itself does not hurt your score, but it increases your credit utilization ratio, which can lower your score slightly. If you carry the balance and miss a payment, that will damage your score more significantly. Paying off the cash advance quickly minimizes the impact.