You can withdraw cash from a credit card, but it is not the same as using the card to buy something
A cash advance is a withdrawal of money from your credit card's available credit. You get actual cash — from an ATM, a bank teller, or sometimes a convenience store — and the amount you withdraw becomes part of your credit card balance, just like a purchase would. The key difference is that cash advances cost more and start charging interest when ready.
The three main ways to get cash from a credit card are: using an ATM with your card's PIN, going to a bank teller and asking for a cash advance, or using a convenience check if your card issuer sends them. Each method has different fees and limits.
Key Takeaways
- Cash advances charge a separate fee (usually 3 to 5 percent of the amount) on top of your regular interest rate.
- Interest on a cash advance starts accruing the day you withdraw it, with no grace period like you get on purchases.
- Your card issuer sets a cash advance limit that may be lower than your overall credit limit.
- Most credit cards charge a higher interest rate on cash advances than on regular purchases, sometimes 5 to 10 percentage points higher.
How cash advance fees and interest work
When you take a cash advance, your card issuer charges you two separate costs. The first is an upfront fee, typically 3 to 5 percent of the amount you withdraw. If you withdraw $300, you might pay $9 to $15 just to get the cash. This fee is added to your balance when ready.
The second cost is interest, which starts the moment you withdraw the money. Unlike a purchase, which may have a grace period of 21 to 25 days before interest kicks in, a cash advance begins accruing interest right away. The interest rate on cash advances is often 5 to 10 percentage points higher than your purchase rate. If your purchase APR is 18 percent, your cash advance APR might be 25 or 28 percent.
Because interest starts when ready and the rate is higher, a $300 cash advance can cost you $50 or more in fees and interest over a few months if you do not pay it back quickly.
Cash advance limits and how they differ from your credit limit
Your card issuer sets a separate cash advance limit, which is often lower than your overall credit limit. You might have a $5,000 credit limit but only a $1,000 cash advance limit. This limit is set by the issuer based on your creditworthiness and account history, and you can call the card company to ask what yours is.
The cash advance limit is the maximum you can withdraw at one time or over a billing period, depending on the issuer's rules. Withdrawing cash does count against your overall available credit — if you take a $500 cash advance on a $5,000 limit, you now have $4,500 in available credit left for purchases.
Where you can withdraw cash from a credit card
The most common method is an ATM. You insert your card and enter your PIN (which you may need to request from your issuer if you have never used it). The ATM will show you the cash advance fee before you confirm the withdrawal. ATMs at your card issuer's own bank branches usually charge no additional ATM fee, but ATMs at other banks often add a $2 to $3 surcharge on top of the cash advance fee.
You can also go to a bank teller at any bank and ask for a cash advance on your credit card. The teller will process it the same way, and you will pay the same cash advance fee. Some banks may charge an additional fee for this service, so ask before you proceed.
If your card issuer sends you convenience checks, you can write one like a regular check and deposit it into your bank account or cash it. These are treated as cash advances with the same fees and interest rates. Many issuers have stopped sending these, but some still do.
Why a cash advance is expensive compared to other borrowing options
A cash advance should usually be a last resort because the total cost is high. A 3 percent fee plus 25 percent APR means you are paying roughly 28 percent annually just to access your own credit. By comparison, a personal loan from a bank or credit union typically charges 8 to 15 percent APR with no upfront fee. A payday loan is predatory and worse, but a credit card cash advance is still more expensive than most other ways to borrow.
If you need cash and have other options — a personal loan, a line of credit, or even asking family — those are usually cheaper. The only time a cash advance makes sense is when you need cash when ready and have no other way to get it, and you plan to pay it back within a month or two.
How to pay back a cash advance
When you make a payment to your credit card, the issuer applies it to your balance in a specific order set by law. Payments go first to the lowest-interest debt (usually purchases), then to higher-interest debt (like cash advances). This means if you have both purchases and a cash advance on your card, your payment will pay off the purchase first, leaving the cash advance to accrue interest longer.
To pay off a cash advance faster, contact your issuer and ask if you can make a payment that goes directly to the cash advance balance. Some issuers allow this; others do not. If yours does not, you will need to pay off all your purchases first before the cash advance starts coming down.
Alternatives to a credit card cash advance
If you need cash but want to avoid the high fees and interest, consider these options first. A personal loan from a bank, credit union, or online lender typically charges 8 to 20 percent APR with no upfront fee and a fixed repayment schedule. A line of credit works similarly and may have a lower rate if you have good credit. A balance transfer to a card offering 0 percent APR for a set period can be cheaper if you need to carry a balance, though you will pay a 3 to 5 percent transfer fee upfront.
If you have a savings account, withdrawing from savings costs nothing and avoids debt entirely. If you have a 401(k), some plans allow loans against your balance at a low interest rate, though this should only be done as a last resort because it reduces your retirement savings.
Frequently Asked Questions
Does taking a cash advance hurt my credit score?
A cash advance itself does not hurt your score, but it does increase your credit utilization (the percentage of your available credit you are using), which can lower your score slightly. If you miss payments on the cash advance, that will hurt your score significantly. Paying it off quickly keeps the damage minimal.
Can I take a cash advance if I have no money in my bank account?
Yes. A cash advance draws from your credit card's available credit, not from a bank account. You do not need a bank account to take a cash advance, though you do need the card and your PIN. The money you withdraw is borrowed money that you will owe back with interest and fees.
What happens if I cannot pay back a cash advance?
The balance stays on your credit card and continues to accrue interest at the higher cash advance rate. If you miss payments, late fees explore and your credit score drops. After 30 days late, the issuer may report it to credit bureaus. After 180 days, the account may be charged off and sent to a collection agency.
Is there a limit to how much cash I can withdraw?
Yes. Your issuer sets a cash advance limit, which is often $500 to $2,500 but varies by card and your creditworthiness. You also cannot withdraw more than your available credit. Call your card issuer to find out your specific limit.
Can I use a credit card to withdraw cash at a store like Walmart or Target?
No. Cashback at a store (asking for cash when you make a purchase) is not a cash advance — it is a purchase, and it charges no separate fee or higher interest rate. A cash advance can only be done at an ATM, a bank teller, or with a convenience check. Cashback is a much cheaper way to get cash if the store offers it.