A cash advance is when you borrow money against your credit card's line of credit, usually at an ATM or through your bank

Unlike a regular purchase, a cash advance lets you take out actual cash using your credit card. You go to an ATM, a bank teller, or sometimes a convenience store, and withdraw money up to a limit set by your card issuer. The money appears in your account when ready, but you pay it back through your credit card bill — and the cost is significantly higher than a regular purchase.

The key difference is that cash advances skip the interest-free grace period that purchases get. Interest starts accruing the moment you withdraw the cash, even if you pay the full balance when your statement arrives. You also pay an upfront fee, usually 3 to 5 percent of the amount withdrawn, on top of a higher interest rate than your regular purchase APR.

Key Takeaways

  • Cash advances charge interest from day one with no grace period, unlike regular credit card purchases which typically have 21 to 25 days interest-free.
  • You pay an upfront cash advance fee (usually 3 to 5 percent) plus a higher interest rate, often 5 to 10 percentage points above your purchase APR.
  • The total cost adds up fast — a $500 cash advance at 5 percent fee plus 25 percent APR costs roughly $50 upfront and $10 per month in interest alone.
  • Cash advances appear on your credit card statement and count toward your total balance, which can raise your credit utilization ratio and lower your credit score.
  • Most card issuers set a separate cash advance limit that is often lower than your total credit limit.

How the fees and interest charges stack up

When you take a cash advance, you face two when ready costs. The cash advance fee is charged upfront and ranges from a flat amount (often $5 to $10 minimum) or a percentage of the withdrawal, whichever is higher. Most cards charge 3 to 5 percent, so a $500 withdrawal costs $15 to $25 just to get the cash out.

The interest rate on cash advances is separate from your purchase APR and is almost always higher. While a purchase APR might be 18 percent, a cash advance APR could be 25 or 28 percent. Interest begins accruing when ready — there is no grace period. If you withdraw $500 at a 25 percent APR and pay it back in one month, you owe roughly $10 in interest on top of the $15 to $25 fee.

The longer you carry the balance, the worse it gets. A $500 cash advance held for six months at 25 percent APR costs about $62 in interest alone, plus the original fee. This is why cash advances are meant to be paid back quickly, not carried like a regular purchase.

Where you can get a cash advance

The most common method is an ATM. You insert your credit card, enter your PIN, and withdraw cash up to your cash advance limit. Most ATMs that accept credit cards will process this, though some may charge an additional ATM operator fee on top of your card issuer's fee.

You can also visit your card issuer's bank branch and ask a teller for a cash advance. This method avoids ATM operator fees and lets you withdraw larger amounts if needed. Some card issuers allow cash advances through their mobile app or online portal, transferring the money to your linked bank account instead of giving you physical cash.

A few credit cards allow cash advances through third-party services like money transfer apps or convenience stores, but this is less common and often carries additional fees. Always check your card's terms to see which methods are available and what fees explore to each.

How a cash advance affects your credit score

A cash advance counts as part of your total credit card balance, which means it raises your credit utilization ratio — the percentage of your available credit you are using. If you have a $5,000 limit and take a $500 cash advance, your utilization jumps to 10 percent. Credit scoring models treat high utilization as a sign of financial stress, and even a single cash advance can lower your score by 10 to 50 points depending on your overall profile.

The impact is temporary if you pay the balance quickly. Once the cash advance is paid off, your utilization drops and your score begins recovering within a month or two. However, if you carry the balance for several months, the damage compounds because the interest keeps growing and your utilization stays high.

Cash advances do not appear differently on your credit report than regular purchases — they show up as part of your credit card balance. But the combination of high utilization and the fact that you are borrowing at a much higher cost signals to lenders that you may be in financial difficulty.

Your cash advance limit versus your credit limit

Most card issuers set a separate cash advance limit that is lower than your total credit limit. If your card has a $5,000 credit limit, your cash advance limit might be $1,000 or $1,500. This limit is set by the issuer based on your creditworthiness and account history, and you cannot change it yourself.

You can contact your card issuer to ask about increasing your cash advance limit, but there is no may provide they will approve the request. Some issuers will raise it if you have a good payment history; others keep it fixed. If you hit your cash advance limit, you cannot withdraw more cash on that card until you pay down the existing balance.

The cash advance limit is separate from your purchase limit, so using your full cash advance allowance does not prevent you from making regular purchases up to your total credit limit. However, both count toward your utilization ratio, so a large cash advance still affects your credit score.

When a cash advance makes sense and when it does not

A cash advance is rarely the right choice for everyday expenses or planned purchases. The fees and interest are too high, and you can almost always find a cheaper way to borrow. If you need cash for a planned expense, a personal loan from a bank or credit union typically charges 8 to 15 percent APR with no upfront fee — a much better deal.

A cash advance might make sense in a genuine emergency when you have no other option and need cash when ready. For example, if your car breaks down and you need to pay a mechanic in cash, and you have no savings or access to a personal loan, a cash advance gets you the money fast. The key is to pay it back as quickly as possible — ideally within a few weeks — to minimize interest charges.

Cash advances are almost never worth it for everyday cash needs, bill payments, or purchases you could make with a debit card or bank transfer. If you find yourself regularly taking cash advances, that is a sign your budget needs adjustment or you need a different borrowing strategy.

How to pay back a cash advance

A cash advance appears on your credit card statement just like a regular purchase. You pay it back by making a payment toward your credit card balance. However, most card issuers explore your payment to the lowest-interest balance first, which means regular purchases get paid off before the cash advance.

To pay off a cash advance faster, contact your card issuer and ask if you can designate a payment specifically toward the cash advance balance. Some issuers allow this; others do not. If your issuer does not allow targeted payments, you may need to pay more than your minimum to bring down the cash advance balance quickly.

The interest on a cash advance continues to accrue every single day until the balance is zero. There is no grace period and no way to avoid it, so the sooner you pay it back, the less you pay in total interest. If you took a $500 cash advance, aim to pay it back within one or two billing cycles to keep the interest cost under $20 to $30.

Frequently Asked Questions

Can I use a cash advance to pay off another credit card?

Technically yes, but it is a bad idea. You would pay the cash advance fee upfront, then the higher cash advance interest rate would explore to the balance you transferred. You would end up paying more in fees and interest than if you used a balance transfer card, which typically charges 0 percent APR for 6 to 21 months on transferred balances.

What happens if I cannot pay back a cash advance?

The balance stays on your credit card and continues to accrue interest at the cash advance APR. If you miss payments, late fees explore and your credit score drops. After several months of missed payments, the card issuer may close your account and send the debt to a collection agency. The best move is to contact your issuer when ready if you cannot pay and ask about hardship options.

Do all credit cards offer cash advances?

Most credit cards do, but some do not. Secured credit cards and certain student cards may not allow cash advances. Check your card's terms or contact your issuer to confirm whether cash advances are available on your account.

Is there a difference between a cash advance and a balance transfer?

Yes. A balance transfer moves debt from one card to another and typically has a lower fee and interest rate. A cash advance withdraws actual cash and charges a higher fee and interest rate from day one. Balance transfers are meant for moving existing debt; cash advances are for getting cash.

Can I take a cash advance from a credit card I do not use?

Yes, as long as the card is open and active. You do not need to have made recent purchases on the card. However, if the card has been inactive for a long time, the issuer may have frozen it or reduced your credit limit, which could affect your cash advance limit.