Yes, but it costs more than you think

You can withdraw cash using a credit card, but it is not the same as using a debit card at an ATM. When you take cash from a credit card, you are borrowing money on top of your regular credit card balance. The card issuer charges you a cash advance fee — usually 3 to 5 percent of the amount you withdraw — plus a higher interest rate than your regular purchases. That interest starts accruing when ready, with no grace period like you get on regular purchases.

The process itself is straightforward: you go to an ATM, select "cash advance" or "withdraw cash," enter your PIN, and take out money. But the cost of doing this once or twice can add up quickly. If you withdraw $500 and pay a 5 percent fee, you owe $25 just to get the cash, before any interest charges.

Key Takeaways

  • Cash advances charge a separate fee (usually 3 to 5 percent) on top of your regular credit card interest rate.
  • Interest on cash advances starts the day you withdraw the money, with no grace period like regular purchases have.
  • You can get cash at most ATMs using your credit card, but the total cost makes this an expensive way to borrow.
  • If you need cash regularly, a debit card or a personal loan will almost always cost you less than repeated cash advances.

How the fees and interest actually work

When you take a cash advance, your credit card company charges you two separate costs. The first is the cash advance fee, which appears on your statement as a one-time charge. This fee is a percentage of the amount you withdraw — your card's terms will specify whether it is 3 percent, 4 percent, 5 percent, or sometimes a flat dollar amount, whichever is higher. A $300 advance at 5 percent costs you $15 in fees alone.

The second cost is the interest rate. Most credit cards charge a different (higher) APR for cash advances than they do for regular purchases. While your purchase APR might be 18 percent, your cash advance APR could be 25 percent or higher. Unlike regular purchases, which have a grace period (usually 21 to 25 days before interest kicks in), cash advance interest starts accruing the moment you withdraw the money. If you carry the balance for a month, you will owe interest on top of the fee you already paid.

Your credit card statement will show these as separate line items: the cash advance amount, the fee, and then the interest charge. The interest compounds daily, so the longer you carry the balance, the more you owe.

Where you can get a cash advance

You can withdraw cash at most ATMs that display your card's logo — Visa, Mastercard, American Express, or Discover. You can also get a cash advance at a bank branch or credit union, even if you do not have an account there, though some charge an additional ATM fee on top of your card issuer's fee. Some convenience stores and casinos also offer cash advances, but these often charge extra fees.

The amount you can withdraw is limited by your cash advance limit, which is usually lower than your total credit limit. Your card issuer sets this separately and may be $500, $1,000, or some other amount depending on your creditworthiness and account history. You can call the number on the back of your card to find out your cash advance limit before you go to the ATM.

When a cash advance makes sense (and when it does not)

A cash advance is rarely the right choice for everyday cash needs. If you need $100 for groceries, paying a $3 to $5 fee plus interest is wasteful when you could use a debit card or withdraw from your bank account for free. The same is true if you are trying to pay off debt — using a cash advance to pay a bill just moves the debt from one place to another while costing you more.

There are narrow situations where a cash advance might be your only option: if you are traveling internationally and your debit card does not work, or if you need cash in an emergency and have no other way to get it. Even then, you should plan to pay back the advance as quickly as possible to minimize interest charges. If you find yourself regularly needing cash advances, that is a sign you should look at your budget or consider a personal loan, which typically has a lower interest rate and no daily-accruing fees.

How a cash advance affects your credit score

Taking a cash advance does not directly hurt your credit score the way a missed payment does, but it can indirectly lower your score in two ways. First, the cash advance increases your credit utilization — the percentage of your available credit you are using. If you have a $5,000 credit limit and you take a $1,000 cash advance, your utilization jumps to 20 percent. High utilization signals to credit scoring models that you are relying heavily on borrowed money, which can lower your score.

Second, if you carry the cash advance balance and miss a payment, that missed payment will be reported to the credit bureaus and will damage your score. The key is to treat a cash advance like any other credit card balance: pay it off on your statement due date to avoid interest and protect your credit.

Alternatives that cost less

If you need cash, consider these options before using a cash advance. A debit card withdrawal from your own bank account is free and when ready. A personal loan from a bank or credit union typically has a lower interest rate than a cash advance and lets you borrow a larger amount. Some employers offer paycheck advances or loans to employees. If you are in a true financial emergency, a local nonprofit credit counselor can help you explore options without charging you.

If you regularly need cash, the problem might be that you are not budgeting enough for cash expenses. Tracking where your cash goes for a month can help you understand whether you need a larger cash budget or whether you can shift more of your spending to your debit card.

Frequently Asked Questions

Does taking a cash advance hurt my credit?

Not when ready, but it can lower your score if it raises your credit utilization above 30 percent. If you carry the balance and miss a payment, that missed payment will damage your credit. Pay off the advance by your statement due date to avoid both problems.

Can I use a cash advance to pay off another credit card?

Technically yes, but it is a bad idea. You are paying a cash advance fee plus a higher interest rate just to move debt around. If you are trying to consolidate debt, a balance transfer or personal loan will cost you much less.

What is the difference between a cash advance and a balance transfer?

A balance transfer moves debt from one card to another (usually with a lower introductory rate). A cash advance withdraws actual cash and charges you a fee plus interest when ready. Balance transfers are for moving existing debt; cash advances are for getting cash in hand.

Can I get a cash advance if I have a low credit limit?

Your cash advance limit is set separately from your credit limit and is usually lower. Even with a low credit limit, you may have a cash advance limit, but it depends on your card issuer's policies. Call the number on your card to find out.

How long does it take to pay off a cash advance?

That depends on how much you owe and how much you pay each month. Your credit card statement will show a minimum payment, but paying only the minimum means you will carry the balance for months and pay significant interest. Paying the full balance by your due date costs you only the upfront fee.