What Is a Cash Advance on a Credit Card
A cash advance is a transaction where you borrow money directly from your credit card issuer and receive physical cash. Unlike regular purchases where you buy goods or services, a cash advance lets you withdraw money from an ATM, bank, or other location using your credit card. The cash you receive is added to your credit card balance, and you must repay it like any other credit card debt.
Learn About Contacting Wells Fargo Credit Card Services →
According to the Federal Reserve's 2023 data, approximately 34% of credit cardholders have used a cash advance at least once. Cash advances differ significantly from regular credit card purchases in several important ways. When you make a regular purchase, you typically have a grace period—usually 21 to 25 days—before interest starts accruing. With cash advances, interest begins charging immediately, often the same day you withdraw the money. There is no grace period for cash advances.
The mechanics of obtaining a cash advance are straightforward. You can visit an ATM that accepts your credit card and withdraw funds up to your available cash advance limit. This limit is separate from your regular credit limit. For example, if you have a $5,000 credit limit, your cash advance limit might be $1,500 or $2,000—typically between 20% and 50% of your total credit limit. You can also obtain cash advances by visiting your bank or by requesting a cash advance check from your card issuer.
Understanding the structure of cash advances helps you make informed decisions about when and how to use them. Cash advances carry higher costs than regular purchases because they include multiple fees and higher interest rates. Banks view cash advances as riskier transactions since there is no underlying purchase and you receive money directly. This risk translates to customer costs through what the Consumer Financial Protection Bureau identifies as some of the highest fees and rates in the credit card industry.
Practical takeaway: Before considering a cash advance, understand that it is a borrowing mechanism with immediate interest charges and additional fees, not a cost-free way to access your credit limit.
Fees and Interest Rates Associated With Cash Advances
Cash advances come with multiple costs that can add up quickly. The first cost is the cash advance fee, which is a one-time charge applied when you withdraw the cash. According to data from the National Credit Counseling Foundation, the average cash advance fee ranges from 3% to 5% of the amount withdrawn. For example, if you withdraw $500, you might pay $15 to $25 in fees alone. Some cards charge a flat fee (such as $5 or $10) instead of a percentage, while others use whichever method results in a higher charge.
Reach Geico for Your Auto Insurance Claim Guide →
Interest rates on cash advances are substantially higher than rates on regular purchases. While the average credit card purchase APR in 2024 ranges from 19% to 24%, cash advance APRs typically run 25% to 30% or higher. This means the cost of borrowing money through a cash advance is significantly more expensive than making a regular purchase on the same card. The interest begins accruing immediately—there is no grace period to pay off the balance interest-free.
Beyond the basic fee and interest rate, some cards impose additional charges. Certain issuers may charge foreign transaction fees if you use an ATM outside the United States. Banks that own the ATMs you use may also charge their own fees (called ATM surcharges), typically ranging from $2 to $5 per transaction. These fees compound the total cost of your cash advance. If you withdraw $300 and pay a 4% cash advance fee ($12), an ATM surcharge of $3, and then carry a balance at 28% APR, the actual cost of that transaction becomes substantial within just a few months.
To illustrate the cost difference, consider this scenario: You charge $500 on your credit card at 21% APR and carry that balance for three months without making payments. The interest cost is approximately $26.25. The same $500 withdrawn as a cash advance with a 4% fee ($20), an ATM surcharge ($3), and 28% APR for three months costs approximately $38 in interest alone, plus the $23 in fees—a total of $61 versus $26.25. This demonstrates why cash advances should only be considered when absolutely necessary.
Practical takeaway: Budget for fees between 3% to 5% of your withdrawal amount plus significantly higher interest rates starting immediately. Calculate the total cost before proceeding with a cash advance.
Step-by-Step Process for Withdrawing Cash at an ATM
The actual mechanics of withdrawing cash using your credit card at an ATM are similar to withdrawing funds from a debit card. First, locate an ATM that displays a Visa, Mastercard, American Express, or Discover logo—whichever brand your credit card carries. Most major bank ATMs accept the major card networks, though you may find lower fees at ATMs owned by your card issuer's bank. Before approaching the ATM, verify that your card issuer allows cash advances and that you know your personal identification number (PIN). If you do not have a PIN for your credit card, you may need to set one up before attempting a withdrawal.
Learn How to Update Your Cash App Bank Account →
Insert your credit card into the ATM slot when prompted. The machine will ask you to enter your PIN. Once authenticated, the ATM will present a menu of options. Select "cash advance" or "cash withdrawal"—the exact wording varies by machine. The ATM will then ask you to specify the amount you wish to withdraw. This is where your cash advance limit becomes relevant. If your available cash advance limit is $1,000, you cannot withdraw more than that amount, even if you have additional regular credit available. Select your desired amount and confirm the transaction.
The ATM will then dispense your cash and print a receipt showing the amount withdrawn, fees charged, and your new card balance. Examine the receipt carefully to verify the amount is correct. Some ATMs charge their own surcharge fee, which may appear on your receipt or be added by your bank later. Keep your receipt for your records and to track your spending. You may also want to photograph the receipt as backup documentation.
Important considerations during this process include choosing the right time of day to ensure the ATM has sufficient cash available and selecting ATMs in safe, well-lit locations. Avoid withdrawing cash in isolated areas or late at night when possible. If the ATM malfunctions or does not dispense the expected cash, contact your bank immediately. Most banks can track whether the transaction was processed and can correct errors, though this may take several business days.
Practical takeaway: Have your PIN ready, select a safe ATM location, verify the amount before confirming, and keep your receipt to track the transaction details and verify charges.
Alternative Methods to Withdraw Cash Beyond ATMs
While ATMs are the most common method, credit cards offer other ways to obtain cash advances. Many banks allow you to visit a branch in person and request a cash advance from a teller. This method may be preferable if you are withdrawing a large amount and want to avoid ATM limits, which often cap withdrawals at $200 to $500 per transaction. Bank tellers can process cash advances for larger amounts if your credit card limit permits. This method also allows you to discuss any questions with a representative and obtain a detailed receipt immediately.
Free Guide to Payday Loan Options Without Bank Account →
Cash advance checks are another option that many card issuers mail to cardholders. These checks function as a way to access your cash advance limit without visiting an ATM. You can deposit a cash advance check into your bank account or cash it at a bank or check-cashing location. However, cash advance checks typically include the same fees and interest rates as ATM withdrawals, and some issuers charge additional processing fees for using these checks. If your card issuer sends you these checks, review the terms carefully before using them.
Some credit card issuers partner with specific retailers to offer cash back options at checkout. You may be able to request cash back when making purchases at participating merchants, though this transaction is typically classified as a purchase rather than a cash advance, meaning you may receive more favorable terms (lower interest, grace period). However, not all credit cards or retailers support this feature, so verify with your issuer before expecting this option.
Peer-to-peer payment apps such as Venmo, PayPal, and Square Cash present another pathway to convert credit card value into cash, though the mechanisms vary. Some apps allow you to transfer funds to a bank account linked to your credit card, and you can then withdraw cash from your bank account. This method typically incurs the