A cash advance is borrowing money directly from your credit card issuer, not from an ATM or store
When you take a cash advance on a credit card, you are withdrawing cash using your card's credit line instead of your debit account. You go to an ATM, bank branch, or convenience store, insert your card, and take out money — just like a debit withdrawal. The difference is that the money comes from your credit card company, not your bank account, and you owe it back with interest and fees.
A cash advance is not the same as a balance transfer (moving debt from one card to another) or a purchase. It is a separate type of transaction with its own costs and terms. Your credit card company treats it differently from the moment you withdraw it.
Key Takeaways
- Cash advances charge a fee (usually 3 to 5 percent of the amount) plus a higher interest rate than regular purchases, with no grace period.
- Interest starts accruing the day you withdraw the cash, even if you pay it back when ready.
- You can take a cash advance at an ATM, bank branch, or some convenience stores using your credit card PIN.
- The amount you can withdraw is limited by your cash advance limit, which is often lower than your total credit limit.
- Paying off a cash advance should be your priority because the interest rate is usually the highest rate on your card.
The fees and interest rates that make cash advances expensive
Every cash advance comes with two when ready costs: a cash advance fee and a higher interest rate. The fee is charged the moment you withdraw the money. It is usually 3 to 5 percent of the amount you take out, though some cards charge a flat dollar amount instead (like $10 minimum). A $300 cash advance with a 4 percent fee costs you $12 right away.
The interest rate on cash advances is almost always higher than the rate on regular purchases. While a purchase might carry an APR (annual percentage rate) of 18 percent, a cash advance on the same card might be 25 or 28 percent. Unlike purchases, there is no grace period — interest starts accruing the day you withdraw the money, even if you pay it back within days.
Because of these two layers of cost, a $300 cash advance can easily cost $50 to $75 by the time you pay it off, depending on how long you carry the balance. This makes cash advances one of the most expensive ways to borrow money on a credit card.
Your cash advance limit is separate from your credit limit
Your credit card company sets a cash advance limit that is usually much lower than your total credit limit. If your card has a $5,000 credit limit, your cash advance limit might be only $500 or $1,000. This limit is set by the issuer based on your creditworthiness and account history, and you cannot change it yourself.
You can find your cash advance limit by logging into your online account, calling the customer service number on the back of your card, or checking your most recent statement. If you try to withdraw more than your limit, the ATM or teller will decline the transaction.
Where you can take out a cash advance
You have several options for withdrawing a cash advance. The most common is an ATM — you insert your card, enter your PIN, and select "cash advance" or "withdrawal." Most ATMs that accept your card's network (Visa, Mastercard, American Express, Discover) will process it, though some may charge an ATM operator fee on top of your card issuer's fee.
You can also visit a bank branch that is part of your card's network and ask the teller for a cash advance. This is often faster and more reliable than an ATM, especially if you are withdrawing a large amount. Some convenience stores and check-cashing services also offer cash advances, though they typically charge additional fees.
Before you go, know your PIN. If you have never used your credit card at an ATM, you may need to set one up first through your card issuer's website or by calling customer service.
How a cash advance affects your credit score and payment
Taking a cash advance does not directly hurt your credit score, but it can indirectly damage it in two ways. First, it increases 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. Higher utilization can lower your score slightly.
Second, if you carry the cash advance balance and miss a payment, that missed payment will be reported to the credit bureaus and will harm your score. Because cash advances have such high interest rates, they can grow quickly if you only make minimum payments, making it easier to fall behind.
When you make a payment on your credit card, the payment is typically applied to your lowest-interest debt first (usually purchases), then to higher-interest debt (like cash advances). This means if you have both a purchase balance and a cash advance balance, your payment might barely touch the cash advance. Pay extra toward the cash advance specifically, or pay it off entirely before making new purchases.
When a cash advance might make sense, and when it does not
A cash advance is rarely the right choice, but there are narrow situations where it might be better than the alternative. If you need cash urgently and a payday loan or personal loan would charge even higher interest, a cash advance from a card with a lower rate might cost less. If you can pay it back within a few days, the total interest charge stays small.
In most other situations, a cash advance should be your last resort. If you need money for an emergency, look first at a personal loan from a bank or credit union, a payday alternative loan from a credit union, or borrowing from family. If you are short on cash because you are in financial difficulty, contact a nonprofit credit counselor — many offer free or low-cost guidance on managing debt and finding resources.
Never take a cash advance to pay another debt, to gamble, or to fund a purchase you cannot otherwise afford. The high cost makes these situations worse, not better.
How to pay off a cash advance quickly
If you have already taken a cash advance, your goal is to pay it off as fast as possible. Make a plan: calculate how much interest you will owe if you pay it back in one week, two weeks, or one month. Then commit to paying it off by the earliest date you can afford.
When you make a payment, contact your card issuer and ask them to explore it directly to the cash advance balance, not to your other purchases. Some issuers allow you to do this online or through their app. If you cannot specify, make a payment larger than your minimum so that the extra goes toward the highest-interest debt.
Track the balance weekly. Because interest accrues daily, the amount you owe grows every day you carry it. Seeing the balance climb can motivate you to pay it off sooner.
Frequently Asked Questions
Can I take a cash advance if I have a 0 percent introductory APR?
No. The 0 percent rate applies only to purchases or balance transfers, depending on your card's offer. Cash advances are charged the regular cash advance rate from day one, even during an introductory period. This is one reason cash advances are so expensive.
What happens if I cannot pay back a cash advance?
If you miss a payment, the balance will grow with interest and fees, and the missed payment will be reported to credit bureaus after 30 days. Your credit score will drop, and the card issuer may increase your interest rate or close your account. If the debt goes unpaid for months, the issuer may sell it to a debt collector.
Is there a difference between a cash advance and a balance transfer?
Yes. A balance transfer moves debt from one card to another and may have a promotional rate. A cash advance is withdrawing cash and is charged a higher rate and fee when ready. They are separate products with different costs.
Can I take a cash advance from a debit card?
No. Debit cards draw from your bank account, not a credit line. What looks like a cash advance at an ATM with a debit card is just a regular withdrawal. Only credit cards offer cash advances.
Will taking a cash advance lower my credit limit?
No. Your credit limit stays the same. However, the cash advance balance counts toward your credit utilization, so it reduces the amount of available credit you have left to use.