The main ways to get cash from your credit card
You can get cash from a credit card in three ways: a cash advance at an ATM or bank, a balance transfer check, or a cash-like purchase (such as buying a money order or casino chips). Each one costs you differently and affects your balance in different ways.
A cash advance is the most direct method. You go to an ATM, bank teller, or convenience store and withdraw cash using your credit card, just as you would with a debit card. The money appears in your account immediately, but the credit card company charges you a fee (usually 3 to 5 percent of the amount) plus a higher interest rate than your regular purchases — often 20 to 30 percent, starting right away with no grace period.
A balance transfer check is a paper check your credit card issuer mails to you. You deposit or cash it like any other check. The fee and interest rate are usually the same as a cash advance, though some cards offer a promotional period with lower rates on balance transfers.
Cash-like purchases — buying money orders, gift cards, or casino chips — are treated as cash advances by most card issuers, meaning you pay the same fees and rates, even though you are technically buying something rather than withdrawing cash.
Key Takeaways
- Cash advances charge a fee of 3 to 5 percent upfront, plus interest rates of 20 to 30 percent that begin accruing immediately with no grace period.
- Interest on a cash advance is calculated daily from the moment you withdraw it, so the longer you carry the balance, the more you pay.
- A cash advance does not count toward your rewards points or cash back, even if your card normally earns them on purchases.
- Balance transfer checks work the same way as cash advances in terms of fees and interest, though some cards offer promotional rates for a limited time.
- Paying off a cash advance quickly is critical because the interest rate is high and starts immediately, unlike purchase interest which may have a grace period.
How cash advance fees and interest work
When you take a cash advance, you are charged two separate costs. The first is an upfront cash advance fee, typically 3 to 5 percent of the amount you withdraw. If you withdraw $500, you might pay $15 to $25 just to get the cash. This fee is added to your credit card balance immediately.
The second cost is interest, which begins accruing the day you withdraw the cash. Unlike purchases, which often have a grace period (usually 21 to 25 days before interest kicks in), cash advances have no grace period. If your card's cash advance rate is 25 percent annually, that translates to roughly 0.07 percent per day. On a $500 advance, you are paying about $0.35 per day in interest alone.
The interest compounds daily, meaning each day's interest is added to your balance and the next day's interest is calculated on the larger amount. Over a month, a $500 cash advance at 25 percent interest costs you roughly $10 in interest charges, on top of the $15 to $25 fee you already paid.
Why cash advances are expensive compared to other borrowing
A cash advance is one of the most expensive ways to borrow money. A personal loan from a bank typically charges 6 to 36 percent interest depending on your credit, with no upfront fee. A payday loan charges a fee but is meant to be repaid in two weeks. A cash advance charges both a fee and a high interest rate that compounds daily, with no time limit on repayment.
Credit cards also prioritize cash advance payments differently than purchase payments. If you make a payment to your card, the issuer typically applies it first to purchases (which have the lowest interest rate), then to balance transfers, then to cash advances (which have the highest rate). This means your cash advance balance shrinks more slowly than you might expect, and you pay more interest overall.
If you need cash urgently, a personal loan, line of credit, or even a short-term loan from family or friends is usually cheaper than a cash advance. If you have no other option, pay the cash advance off as quickly as possible to minimize the interest charges.
What happens to your credit score and available credit
A cash advance reduces your available credit immediately. If your card has a $5,000 limit and you take a $500 cash advance, your available credit drops to $4,500 right away. This affects your credit utilization ratio — the percentage of your total credit limit you are using — which is a factor in your credit score calculation.
The cash advance itself does not show up separately on your credit report; it is part of your overall credit card balance. However, if the balance grows because of interest charges and you miss a payment, that missed payment is reported to the credit bureaus and damages your score.
If you are trying to keep your credit utilization low (generally below 30 percent), a cash advance works against that goal. Paying it off quickly helps minimize the damage to your score.
Alternatives to a cash advance
Before taking a cash advance, consider whether one of these options might work better for your situation.
Borrow from friends or family. If someone can lend you the money with no interest or a low interest rate, this is almost always cheaper than a cash advance. Put the agreement in writing so there is no misunderstanding later.
Use a personal loan. Banks, credit unions, and online lenders offer personal loans with fixed interest rates and repayment schedules. Even with a lower credit score, a personal loan rate is often lower than a credit card's cash advance rate.
Ask your employer for an advance on your paycheck. Some employers offer paycheck advances with no fee or interest. Ask your HR or payroll department whether this is an option.
Negotiate with creditors or service providers. If you owe money to a utility company, medical provider, or other creditor, call and ask about a payment plan. Many will work with you rather than send your account to collections.
Sell something you own. Selling items online or to a local buyer takes time but avoids debt entirely.
Use a 0 percent balance transfer card. If you have time to apply and be approved, some cards offer 0 percent interest on balance transfers for 6 to 21 months. You still pay a balance transfer fee (usually 3 to 5 percent), but no interest during the promotional period. This only works if you can pay off the balance before the promotion ends.
How to minimize the cost if you do take a cash advance
If a cash advance is your only option, these steps reduce what you pay.
Withdraw only what you need. The fee and interest are both calculated on the amount you withdraw. A $200 advance costs less than a $500 advance, even at the same rate.
Pay it back as fast as possible. Every day you carry the balance, interest accrues. If you can pay it off within a week or two, the interest charges stay small. If you carry it for months, the interest compounds and becomes expensive.
Make payments above your minimum. Your minimum payment covers only a small portion of the principal; most of it goes to interest. Paying more than the minimum reduces the balance faster and saves you money on interest.
Check whether your card offers a promotional rate on balance transfers. Some cards offer 0 percent interest on balance transfers for a limited time. If you have a cash advance and your card has this offer, you might be able to transfer the balance to a new card and pay it off interest-free during the promotional period. This only works if you can pay off the balance before the promotion ends.
Frequently Asked Questions
Can I take a cash advance if I have a low credit score?
Yes. A cash advance is available to anyone with an active credit card account, regardless of credit score. Your card issuer has already decided to lend to you; a cash advance is just a different way of using that credit. However, your card may have a separate cash advance limit that is lower than your overall credit limit.
What is the difference between a cash advance and a balance transfer?
A cash advance gives you physical cash (or money in your bank account). A balance transfer moves debt from one card to another. Both charge fees and interest, but a balance transfer is typically used to move an existing balance to a card with a lower rate, while a cash advance is used to get cash in hand.
Will taking a cash advance hurt my credit score?
It may lower your score slightly because it increases your credit utilization ratio. However, the bigger damage comes if you miss a payment or carry the balance for a long time and pay a lot of interest. Paying off a cash advance quickly minimizes the impact on your score.
Can I use a cash advance to pay off another debt?
Technically yes, but it is usually not a good idea. You are borrowing at a high interest rate (the cash advance rate) to pay off debt that might have a lower rate. For example, using a cash advance at 25 percent to pay off a personal loan at 12 percent costs you more money overall. Only do this if the debt you are paying off has a much higher interest rate or if you have no other way to avoid a late payment.
How long does a cash advance stay on my credit card statement?
A cash advance appears on your statement as a separate line item and stays there until you pay it off. The fee appears immediately; the interest charges appear each month as they accrue. Once you pay the balance to zero, the cash advance line disappears from future statements.