Yes, you can get cash back on a credit card, but it works differently than a debit card
When you use a debit card at a store, you can ask the cashier for cash back and the money comes straight from your bank account. A credit card does not work that way. You cannot ask for cash back at checkout because you are borrowing money from the card issuer, not spending your own.
However, you can still get cash in your hand using a credit card through three methods: a cash advance at an ATM, a balance transfer check, or a cash advance from your bank. Each one costs you money in fees and interest, and each one should be a last resort, not a regular habit. The rewards cash back you earn from purchases is different — that is money the card issuer gives you back, not money you borrow.
Key Takeaways
- A credit card cash advance at an ATM or bank charges an upfront fee (usually 3 to 5 percent of the amount) plus a higher interest rate than regular purchases, starting when ready with no grace period.
- Balance transfer checks work like a cash advance but arrive in the mail, and they carry the same fees and interest rates as ATM withdrawals.
- Rewards cash back from purchases is money the card issuer gives you, not money you borrow, and it has no fees or interest if you pay your statement balance in full.
- If you need cash urgently, a personal loan or credit union loan usually costs less than a credit card cash advance.
- Cash advances damage your credit score more than regular purchases because they count as borrowed money and raise your credit utilization ratio when ready.
How a credit card cash advance works at an ATM
You insert your credit card into an ATM, enter your PIN, and withdraw cash just like you would with a debit card. The money appears in your hand within seconds. But the cost starts when ready. Most card issuers charge a cash advance fee of 3 to 5 percent of the amount you withdraw — so a $200 withdrawal costs $6 to $10 just to get the cash.
The interest rate on that cash is also higher than the rate on regular purchases. While a typical credit card purchase might charge 18 to 24 percent annual interest, a cash advance often charges 25 to 30 percent or more. Unlike a purchase, there is no grace period — interest starts accruing the day you withdraw the money, even if you pay it back when ready.
If you withdraw $200 and pay it back within a week, you will still owe the $6 to $10 fee plus a few dollars in interest. The card issuer does not care that you borrowed the money for only seven days.
Balance transfer checks and other cash advance methods
Some credit card issuers send you checks in the mail that work like a cash advance. You write a check to yourself or to a creditor, deposit it, and the money is treated as a cash advance on your credit card. The fees and interest rates are the same as an ATM withdrawal — typically 3 to 5 percent upfront, plus 25 to 30 percent annual interest with no grace period.
You can also request a cash advance directly from your bank or credit union if you have a credit card through them. The process is the same: you pay a fee, interest starts when ready, and the rate is higher than a regular purchase.
Some people use a credit card to pay a bill or buy something they can when ready resell, hoping to convert the purchase into cash. This is a form of cash advance in disguise and carries the same costs plus the risk that you will not be able to resell the item quickly enough to pay off the debt.
Why cash advances hurt your credit score
A cash advance raises your credit utilization ratio — the percentage of your available credit that you are using. If you have a $5,000 credit limit and you take out a $500 cash advance, your utilization jumps to 10 percent. Credit scoring models treat cash advances as borrowed money that counts against your available credit, even though you have not made a purchase.
This matters because utilization is one of the largest factors in your credit score. A single cash advance can drop your score by 10 to 50 points, depending on how much you borrow and how much available credit you have. The damage is temporary — your score will recover once you pay off the cash advance — but it happens when ready.
Additionally, if you cannot pay off the cash advance quickly, the high interest rate means the debt grows faster than a regular credit card purchase would. This keeps your utilization high for longer, which keeps your score depressed for longer.
Rewards cash back is different from a cash advance
The cash back you earn from making purchases is not a cash advance. When you spend $100 on a credit card that offers 2 percent cash back, the card issuer credits $2 to your account. This is a reward for using their card, not money you borrowed. You do not pay a fee, and there is no interest.
You can usually redeem rewards cash back in one of three ways: as a statement credit (the issuer subtracts the cash back from your next bill), as a deposit to a linked bank account, or as a check mailed to you. Some cards let you use the cash back to pay down your balance directly.
The key difference is that rewards cash back is money the card issuer gives you, while a cash advance is money you borrow. If you pay your statement balance in full each month, rewards cash back costs you nothing and actually puts money in your pocket.
When you genuinely need cash: better alternatives than a credit card advance
If you need cash urgently and do not have it in your bank account, a credit card cash advance should be your last choice, not your first. A personal loan from a bank or credit union usually charges 8 to 18 percent interest with no upfront fee, which is cheaper than a cash advance. A credit union loan is often cheaper than a bank loan if you are a member.
A payday loan is faster but more expensive — typically 400 percent annual interest or higher — so it is worse than a cash advance. A line of credit from your bank, if you have one, usually charges less interest than a cash advance and may have no upfront fee.
If you have family or friends who can lend you money, that is almost always cheaper than any of these options. If you have a 401(k) or similar retirement account, you may be able to borrow against it at a low interest rate, though this has tax consequences if you do not repay it on time.
How to avoid needing a cash advance
The best way to avoid a cash advance is to keep an emergency fund — even a small one — in a savings account separate from your checking account. If you can keep $500 to $1,000 set aside for unexpected expenses, you will not need to borrow cash at high interest rates.
If you do not have an emergency fund yet, start small. Put $25 or $50 from each paycheck into a savings account and do not touch it. After a few months, you will have enough to cover a small emergency without borrowing.
If you are in a situation where you regularly need cash advances, that is a sign that your income and expenses are not balanced. A credit counselor can help you build a budget and find ways to cut expenses or increase income. Many non-profit credit counseling agencies offer free or low-cost sessions.
Frequently Asked Questions
Can I use a credit card to withdraw cash from an ATM without paying a fee?
No. Every credit card cash advance charges a fee, usually 3 to 5 percent of the amount. Some cards may advertise a lower fee for the first withdrawal, but the fee is never zero. The fee is separate from the interest you will owe.
What is the difference between a cash advance and a balance transfer?
A balance transfer moves debt from one credit card to another, usually at a lower interest rate for a set period. A cash advance gives you cash in hand. Both charge fees and interest, but a balance transfer is meant to pay off existing debt, while a cash advance is meant to give you spending money.
Will a cash advance show up on my credit report?
A cash advance does not appear as a separate line item on your credit report, but it raises your credit utilization ratio because it counts as borrowed money. This can lower your credit score when ready, even if you pay it back within days.
Can I pay off a cash advance faster to reduce interest?
Yes. Interest on a cash advance accrues daily, so paying it off sooner costs less. However, you will still owe the upfront fee no matter how quickly you repay the cash. If you withdraw $200 and pay it back the next day, you still owe the $6 to $10 fee plus one day of interest.
Is a cash advance the same as using my credit card to buy something and then returning it for cash?
No, but some retailers will give you cash back on a return even if you paid with a credit card. This is not a cash advance — it is a refund. However, if you are buying something specifically to return it for cash, you are essentially creating a cash advance and may face fraud flags from the retailer or your card issuer.