Cash advances let you take money out of your credit card account, but they cost more than regular purchases
A cash advance is a withdrawal of cash from your credit card's available credit. You can get one at an ATM, a bank teller, or sometimes through a convenience store or casino. The money comes from your credit line, not from a separate account — you are borrowing against your card's limit, and you start paying interest immediately.
Cash advances are expensive. You pay an upfront fee (usually 3 to 5 percent of the amount withdrawn), plus a higher interest rate than you pay on regular purchases. That interest starts accruing the day you withdraw the money, with no grace period. If you borrow $300 at a 5 percent fee plus 25 percent annual interest, you owe $15 in fees alone before interest charges begin.
Most people use cash advances only when they have no other option — to pay a bill that requires cash, to cover an emergency when their bank account is empty, or to get cash when they are traveling. If you have access to a debit card, a bank account, or a personal loan, those are almost always cheaper.
Key Takeaways
- Cash advances charge an upfront fee (typically 3 to 5 percent) plus a higher interest rate than purchases, with interest starting immediately.
- You can withdraw cash at ATMs, bank tellers, or some retail locations using your credit card PIN.
- Your credit card company sets a separate cash advance limit, which may be lower than your total credit limit.
- Cash advances count toward your credit utilization and can lower your credit score if they push your balance high.
- Paying back a cash advance should be your priority because the interest rate is usually 5 to 10 percentage points higher than your purchase rate.
Where you can withdraw cash and what you need
ATMs are the most common way to get a cash advance. Insert your credit card, enter your PIN, select "cash advance" or "withdrawal," and choose the amount. The ATM will tell you the fee before you confirm. Most credit card companies charge between $3 and $10 per ATM withdrawal, plus the percentage-based fee from your card issuer.
Bank tellers can also process cash advances if you visit a branch in person. Bring your credit card and a photo ID. The teller will verify your identity, process the advance, and give you cash. Some banks charge a fee for this service even if it is your own bank; others waive it for customers. Ask before you proceed.
Convenience stores, grocery stores, and casinos sometimes offer cash advances at their registers, though this is less common than it used to be. You typically need your card and PIN. These locations often charge their own fee on top of your card issuer's fee, making them the most expensive option.
You will need your credit card and your PIN (personal identification number). If you do not have a PIN set up, contact your credit card company to request one before you try to withdraw cash. Some cards do not allow cash advances at all, particularly secured cards or cards designed for people rebuilding credit.
Understanding cash advance limits and how they affect your credit
Your credit card company sets a separate cash advance limit, which is often lower than your total credit limit. If your card has a $5,000 limit, your cash advance limit might be $1,000 or $1,500. You cannot withdraw more than that limit, even if you have unused credit available for purchases.
Cash advances count immediately toward your credit utilization ratio — the percentage of your available credit that you are using. If you have a $5,000 limit and take a $1,000 cash advance, your utilization jumps to 20 percent. High utilization (above 30 percent) can lower your credit score. The damage is temporary if you pay the advance back quickly, but it happens the moment you withdraw the money.
The cash advance also counts as a hard inquiry on your credit report in some cases, though this is less common than it used to be. The main credit impact comes from the utilization and the payment history — if you miss a payment on the cash advance, that shows up on your report for seven years.
Fees and interest rates for cash advances
Cash advances have two costs: an upfront fee and a higher interest rate. The upfront fee is usually 3 to 5 percent of the amount withdrawn, charged immediately. A $300 advance costs $9 to $15 in fees alone. Some cards charge a flat fee instead (like $10 per advance) if that is lower than the percentage.
The interest rate on cash advances is typically 5 to 10 percentage points higher than your purchase rate. If your card charges 18 percent APR on purchases, the cash advance rate might be 23 or 25 percent APR. Unlike purchases, there is no grace period — interest starts accruing the day you withdraw the money, even if you pay it back within a few days.
Interest on a $300 cash advance at 25 percent APR costs about $6.25 per month if you do not pay it back. Combined with the $9 to $15 upfront fee, your total cost to borrow $300 for one month is roughly $15 to $21. Over six months, the interest alone could exceed $37.
How to pay back a cash advance quickly
Payments on cash advances should go to the advance first, not to your overall balance. Credit card companies apply payments in a specific order set by law: first to the balance with the lowest interest rate (usually purchases), then to higher-rate balances. If you make a payment, it may go toward your purchase balance first, leaving the cash advance to accrue interest.
To make sure your payment goes to the cash advance, contact your card issuer and ask them to apply your next payment to the cash advance specifically. Some card issuers allow you to make this request online or through their app. Write down the date and time you made the request and the name of the representative who confirmed it.
Pay more than the minimum payment if you can. The minimum payment usually covers only the interest and fees, not the principal. If you pay only the minimum on a $300 cash advance, you might pay $15 to $20 per month and take years to pay it off. Paying the full amount back within one or two billing cycles keeps the total cost low.
Alternatives to cash advances
A personal loan from a bank or credit union is almost always cheaper than a cash advance. Personal loans charge lower interest rates (typically 6 to 36 percent depending on your credit) and have no upfront fee. You know the exact payment and payoff date from the start. The downside is that approval takes a few days, so this does not work for same-day cash needs.
A payday loan is faster but often more expensive than a cash advance. Payday lenders give you cash the same day, but charge fees of $15 to $20 per $100 borrowed, which works out to 400 percent APR or higher. Payday loans are a last resort, not a better option than credit card cash advances.
Borrowing from family or friends, if that is an option, costs nothing and has no interest. Many people avoid this because it can strain relationships, but it is worth considering if you need cash for a genuine emergency and have no other source.
If you need cash regularly, opening a checking account with a debit card solves the problem. Debit card withdrawals at ATMs are free or cost only $1 to $3, and there is no interest because you are using your own money. If you do not have a bank account, many credit unions and online banks offer free checking with no minimum balance.
What happens if you cannot pay back a cash advance
If you miss a payment on a cash advance, the interest rate may increase and a late fee will be added to your balance. After 30 days, the missed payment shows up on your credit report. After 60 days, your card issuer may freeze your account or lower your credit limit. After 180 days, the debt may be sent to a collection agency.
A cash advance debt does not disappear if you ignore it. Collection agencies can sue you, and if they win, they can garnish your wages or place a lien on your property (rules vary by state). The debt stays on your credit report for seven years, making it harder to borrow money, rent an apartment, or sometimes even get a job.
If you are struggling to pay back a cash advance, contact your card issuer immediately. Some companies offer hardship programs that lower your interest rate or pause payments for a period of time. It is not a permanent solution, but it can buy you time to get back on your feet.
Frequently Asked Questions
Can I use a credit card cash advance to pay another credit card bill?
Technically yes, but it is a bad idea. You are borrowing at 25 percent interest to pay a bill that might be at 18 percent interest. You end up paying more in interest, not less. If you are juggling multiple cards, contact the card issuer with the highest balance and ask about a lower interest rate or a hardship program instead.
Does a cash advance show up differently on my credit report than a regular purchase?
No, it shows up as a balance on your credit report, not as a separate line item. What matters to your credit score is the total balance and whether you pay on time. However, the cash advance affects your utilization ratio immediately, which can lower your score temporarily.
What is the difference between a cash advance and a balance transfer?
A cash advance gives you cash in hand. A balance transfer moves debt from one card to another. Balance transfers sometimes have lower introductory rates (0 percent for 6 to 12 months), but they also charge an upfront fee. Cash advances have higher ongoing interest but no introductory period.
Can I get a cash advance if my credit is bad?
Yes. Cash advances do not require a credit check — you are borrowing against credit you already have. If your card has a cash advance limit, you can use it regardless of your current credit score or payment history. The limit may be low, but it is available.
Is there a way to avoid the cash advance fee?
No. The fee is built into every cash advance. Some cards charge a percentage, others charge a flat fee, but there is always a cost. The only way to avoid it is to not take a cash advance and use a debit card, bank withdrawal, or personal loan instead.