Yes, you can take cash out of your credit card, but it is not the same as using it to buy something
A cash advance is when you withdraw money directly from your credit card at an ATM, bank, or through a check. The money comes from your credit limit, just like a purchase does. But the bank treats it differently — you pay higher interest, you start paying interest when ready with no grace period, and you often pay an upfront fee just to take the cash out.
Most people should avoid cash advances unless they have no other option. The cost adds up fast, and the debt can be harder to pay off because interest starts accruing the day you withdraw the money.
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 on a cash advance starts the day you withdraw it, not at the end of your billing cycle like a purchase.
- You can get a cash advance at an ATM using your PIN, at a bank teller, or by writing a convenience check from your card issuer.
- If you need cash, a personal loan, payday loan alternative, or borrowing from a friend usually costs less than a credit card cash advance.
How to take a cash advance and what it costs
There are three ways to get cash from your credit card. The first is to go to an ATM that accepts your card, enter your PIN, and withdraw money up to your daily limit (which is often lower than your credit limit). The second is to visit a bank branch and ask the teller for a cash advance — you will need your card and ID. The third is to use a convenience check that your card issuer mails to you; you write it like a regular check and deposit it into your bank account.
Every cash advance comes with costs. You pay a cash advance fee, which is usually 3 to 5 percent of the amount you withdraw — so a $500 advance might cost $15 to $25 just to get the money. On top of that, you pay cash advance interest, which is typically 2 to 3 percentage points higher than your regular purchase APR. If your card charges 18 percent on purchases, the cash advance rate might be 21 or 22 percent. Unlike a purchase, there is no grace period — interest starts the day you withdraw the cash.
Because of these costs, a $500 cash advance can easily cost $50 to $100 in fees and interest over a few months if you do not pay it back quickly.
Why cash advances are more expensive than other borrowing
The fee and interest rate combination makes cash advances one of the most expensive ways to borrow money. A personal loan from a bank or credit union typically charges 6 to 36 percent APR depending on your credit score, with no upfront fee. A payday loan alternative through a nonprofit credit counselor might charge a small fee but no interest. Even a payday loan, which is expensive, usually costs less than a credit card cash advance if you pay it back within two weeks.
The reason credit card companies charge so much is that a cash advance is riskier for them — you have the money in hand and could spend it on anything, whereas a purchase is tied to a specific merchant. They also know that people who take cash advances are often in a tight spot and will pay whatever it costs.
How cash advances affect your credit score
A cash advance shows up on your credit report as a balance on your credit card, just like a purchase does. It counts toward your credit utilization ratio — the amount of your credit limit you are using. If you have a $5,000 limit and take a $1,000 cash advance, your utilization jumps to 20 percent, which can lower your credit score slightly.
The bigger impact comes if you carry the balance. Missed or late payments on a cash advance hurt your score the same way they hurt any credit card debt. Because cash advances are expensive, people often struggle to pay them off, which means the damage to your score can last months or years.
Better alternatives to a cash advance
If you need cash, explore these options first. A personal loan from a bank, credit union, or online lender usually has a lower interest rate and no upfront fee. You know the exact monthly payment and payoff date upfront. A credit union loan is often cheaper than a bank loan if you are a member. A payment plan with the person or business you owe money to might let you pay over time without borrowing at all.
If you are in a financial crisis, a nonprofit credit counselor can help you find low-cost borrowing options or negotiate with creditors. The National Foundation for Credit Counseling (NFCC) offers free or low-cost counseling. If you have a 401(k) or similar retirement account, you may be able to borrow against it, though this has tax consequences if you do not repay it on time.
How to pay off a cash advance faster
If you have already taken a cash advance, pay it off as quickly as you can. Credit card payments are typically applied to your lowest-interest debt first, so if you have both a purchase balance and a cash advance balance, your payment goes toward the purchase while the cash advance keeps accruing interest at the higher rate. To speed this up, contact your card issuer and ask them to explore your next payment directly to the cash advance balance.
Some card issuers will do this as a courtesy; others require you to make a separate payment or use their online portal to direct funds. Check your statement or call the number on the back of your card to ask. The sooner you pay off the cash advance, the less interest you pay overall.
Frequently Asked Questions
What is the difference between a cash advance and a balance transfer?
A cash advance gives you physical cash and charges a fee plus high interest. A balance transfer moves debt from one card to another and usually has a lower introductory rate for a set period (often 0 percent for 6 to 21 months). Balance transfers are meant for moving existing debt; cash advances are for getting cash. Both hurt your credit utilization and both cost money, but a balance transfer is cheaper if you are moving existing debt.
Can I take a cash advance if my credit is bad?
Yes. If your card is open and active, you can take a cash advance up to your available credit limit, regardless of your credit score. Your card issuer has already decided to lend to you; a cash advance just uses that existing credit differently. However, a poor credit score might mean your credit limit is low or your interest rate is already high, making the cash advance even more expensive.
Will my credit card company let me take out my full credit limit as cash?
Probably not. Most card issuers set a separate cash advance limit that is lower than your credit limit — often 20 to 50 percent of your total limit. So if your credit limit is $5,000, your cash advance limit might be $1,000 or $2,500. You can call the number on the back of your card to ask what your cash advance limit is.
What happens if I cannot pay back a cash advance?
The debt stays on your credit card and accrues interest every month. If you miss payments, your credit score drops, your interest rate may increase, and the card issuer can eventually send the debt to a collection agency. If you are struggling, contact your card issuer to discuss a hardship program or payment plan before you miss a payment.