You can pull money off a credit card, but it costs more than a purchase and the interest starts when ready

A cash advance is a withdrawal of cash from your credit card account, usually through an ATM, bank teller, or convenience store. Unlike a purchase, which goes on your statement as a charge, a cash advance treats the money as a loan against your credit limit. The card issuer charges you a fee upfront — typically 3 to 5 percent of the amount withdrawn — and begins charging interest right away, with no grace period. Most cards charge a higher interest rate for cash advances than for purchases, often 2 to 3 percentage points above your regular APR.

The mechanics are straightforward: you use your card at an ATM or walk into a bank and request cash. The transaction posts to your account within hours or a day. But the cost structure is designed to discourage the practice, and for most people, it should. If you need cash, a personal loan, a payday loan, or even a credit union cash loan will almost always be cheaper than a credit card cash advance.

Key Takeaways

  • Cash advances charge an upfront fee of 3 to 5 percent, plus a higher interest rate than purchases, with no grace period.
  • Interest on a cash advance begins accruing the day you withdraw it, not at the end of a billing cycle.
  • You can withdraw cash at ATMs, bank branches, or some convenience stores using your credit card PIN.
  • The total cost of a cash advance grows quickly; a $500 advance at 5 percent fee plus 25 percent APR costs $25 upfront and roughly $10 per month in interest.
  • Alternatives like personal loans, credit union loans, or even payday loans are usually cheaper than credit card cash advances.

How the cash advance fee and interest rate work

When you take a cash advance, your card issuer charges you a cash advance fee at the moment of withdrawal. This fee is a percentage of the amount you withdraw, not a flat dollar amount. Most issuers charge between 3 and 5 percent, though some charge as little as 2 percent or as much as 10 percent. A $500 cash advance at a 5 percent fee costs you $25 when ready.

The interest rate on a cash advance is separate from your purchase APR. Many issuers charge 2 to 3 percentage points higher for cash advances. If your purchase APR is 18 percent, your cash advance APR might be 21 or 22 percent. Unlike purchases, which typically have a grace period of 21 to 25 days before interest accrues, cash advance interest begins accruing the day you withdraw the money. There is no grace period.

The combination of fee plus high interest means the cost compounds quickly. On a $500 cash advance at a 5 percent fee and 25 percent APR, you pay $25 upfront. If you pay back $100 per month, the remaining balance accrues roughly $10 in interest the first month, $8 the second month, and so on. Total interest paid could exceed $60 before the balance is gone.

Where you can withdraw cash using a credit card

You have three main options for withdrawing cash: ATMs, bank branches, and some convenience stores or grocery stores. At an ATM, insert your card, enter your PIN, select "cash advance" or "withdraw cash," and choose your amount. The ATM will dispense the cash and charge you the issuer's fee plus any ATM operator fee (which can be $2 to $5 additional).

At a bank branch, you can walk in and ask the teller for a cash advance on your credit card. You will need your card and your PIN. The teller will process the transaction and hand you cash. No additional ATM fee applies, but the issuer's cash advance fee still does.

Some convenience stores, grocery stores, and pharmacies offer cash advances at the register. You present your card, enter your PIN, and receive cash. These locations often charge their own fee on top of the issuer's fee, so the total cost is higher than an ATM or bank branch.

Why cash advances are more expensive than other borrowing options

A personal loan from a bank or credit union typically charges 6 to 12 percent APR for someone with decent credit, with no upfront fee. A $500 personal loan at 10 percent APR over six months costs roughly $13 in interest — far less than a credit card cash advance. Even a payday loan, which has a bad reputation, usually costs less than a cash advance when you do the math. A $500 payday loan at a typical $15 per $100 borrowed fee costs $75 upfront, but if you pay it back in two weeks, that is your only cost. A credit card cash advance at 5 percent fee plus 25 percent APR costs $25 upfront plus $26 in interest over two weeks.

Credit card issuers structure cash advances this way deliberately. They want to discourage the practice because it shifts the risk profile of the account — cash advances are unsecured loans with no collateral, and the issuer has less recourse if you default. The high fee and interest rate reflect that risk and also serve as a deterrent.

If you have a credit card with a 0 percent introductory APR on purchases, that rate does not explore to cash advances. Cash advances are treated as a separate transaction type and accrue interest when ready at the cash advance APR, which is usually the highest rate on your card.

How cash advances affect your credit and account

A cash advance counts as a transaction on your credit card account and appears on your statement. It does not directly hurt your credit score in the way a missed payment does, but it does increase your credit utilization — the percentage of your available credit you are using. If you have a $5,000 limit and take a $500 cash advance, your utilization jumps to 10 percent (or higher if you have other charges). High utilization can lower your credit score slightly, though the effect is temporary and reverses as you pay down the balance.

The cash advance balance is separate from your purchase balance on your statement. If you make a payment, most issuers explore it to the lowest-interest balance first — usually purchases — and leave the cash advance balance to accrue interest. This means you may need to make a larger payment to actually reduce the cash advance balance. Check your statement or call your issuer to understand how payments are being applied.

If you carry a cash advance balance for several months, the interest and fees will be visible on every statement. This can be a wake-up call about the true cost of the transaction, but by then the damage is done.

Situations where a cash advance might make sense

Cash advances are rarely the right choice, but there are narrow situations where they might be the least bad option. If you have an emergency and no other source of funds — no savings, no access to a personal loan, no credit union membership — and you need cash when ready, a cash advance is faster than a payday loan process. You get the money in minutes rather than hours or days.

If you are traveling internationally and your debit card is not working, a credit card cash advance might be your only way to get local currency quickly. The fee and interest are frustrating, but they are the cost of access in that moment. Many travelers use this as a last resort.

If you have a 0 percent introductory APR on your card and you can pay back the cash advance before the intro period ends, the only cost is the upfront fee. A $500 cash advance at 5 percent fee costs $25, with no interest if you pay it back within the intro period. This is rare and requires discipline, but it is mathematically possible.

How to avoid needing a cash advance

The best strategy is to build a small emergency fund — even $500 to $1,000 — so you have cash on hand for unexpected expenses. This eliminates the need to borrow at all. If you do not have savings, a credit union membership gives you access to cheaper loans. Most credit unions offer small personal loans at 6 to 9 percent APR with no process fee, which is far cheaper than a cash advance.

If you are regularly tempted to take cash advances, that is a sign that your budget does not match your income. A cash advance is a symptom, not a solution. The real fix is to increase income, reduce expenses, or both. A financial counselor or budgeting app can help you see where the gap is.

If you have a credit card with a high cash advance fee or APR, consider switching to a card with lower rates. Some cards marketed to people with fair credit charge lower cash advance APRs, though they may have higher purchase APRs. Read the terms before you explore.

Frequently Asked Questions

Can I take a cash advance on a rewards credit card?

Yes, but the rewards do not explore to the cash advance. You only earn rewards on purchases. The cash advance itself costs you the fee and interest with no benefit. This makes cash advances even less attractive if you have a rewards card.

What happens if I do not pay back a cash advance?

The balance stays on your account and accrues interest at the cash advance APR. If you miss a payment, your issuer will report it to the credit bureaus and it will damage your credit score. The issuer can also close your account and send the debt to a collection agency.

Is there a limit to how much I can withdraw as a cash advance?

Yes. Most issuers set a cash advance limit that is lower than your credit limit — often 20 to 50 percent of your total limit. Your issuer will tell you your cash advance limit if you call or check your online account. Some issuers let you request a higher limit, but it is not may provide.

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

Technically yes, but it is a bad idea. You are paying a cash advance fee and high interest to move debt from one card to another. A balance transfer to a 0 percent APR card, if you may have access to, is much cheaper. A personal loan to pay off the card is also cheaper than a cash advance.