Yes, you can take cash out of a credit card, but it is not the same as using the card to buy something
When you take cash out using your credit card, you are borrowing money directly from your card issuer at the ATM or bank counter. This is called a cash advance. The moment you withdraw the money, interest starts accruing — usually at a higher rate than your regular purchase APR — and you pay a fee upfront, typically 3 to 5 percent of the amount withdrawn. There is no grace period like there is with purchases. If you borrow $200, you might pay $6 to $10 just to get the cash, plus interest from day one.
Credit card companies allow cash advances because they make money on the fees and interest. But for you, it is one of the most expensive ways to borrow. A personal loan, a payday loan from a credit union, or even a regular bank loan will almost always cost you less.
Key Takeaways
- Cash advances charge a fee (usually 3 to 5 percent) and a higher interest rate than purchases, with no grace period.
- You can withdraw cash at an ATM using your credit card PIN, or visit a bank branch and ask the teller for a cash advance.
- Interest on a cash advance begins when ready, so the longer you carry the balance, the more you pay.
- If you need cash urgently, a credit union loan or personal loan will almost always cost less than a credit card cash advance.
How to take a cash advance at an ATM
Most credit cards come with a PIN that lets you withdraw cash at any ATM that accepts your card network (Visa, Mastercard, American Express, or Discover). If you do not have a PIN, call the number on the back of your card and ask the issuer to set one up — this usually takes a few minutes over the phone.
At the ATM, insert your card, enter your PIN, and select "cash advance" or "withdraw cash" from the menu. The machine will ask how much you want. Enter the amount and complete the transaction. The ATM will show you the fee before you confirm, so you will know the total cost before the money leaves your account.
There is a limit to how much you can withdraw. Your issuer sets a cash advance limit, which is often lower than your credit limit. For example, you might have a $5,000 credit limit but only a $1,000 cash advance limit. Call your card issuer if you need to know your limit or want to request a higher one.
How to take a cash advance at a bank branch
You can also walk into any bank branch — not necessarily your own bank — and ask a teller for a cash advance on your credit card. Bring your card and a photo ID. The teller will process the transaction the same way a merchant would, except they are giving you cash instead of goods or services.
Bank cash advances sometimes charge a different fee than ATM withdrawals, so ask the teller what the fee will be before they process it. The interest rate and grace period rules are the same as an ATM advance.
The fees and interest you will pay
A cash advance typically costs you three things: the upfront fee, the interest rate, and the lost grace period.
The cash advance fee is usually 3 to 5 percent of the amount withdrawn, with a minimum fee of $5 to $10. If you withdraw $500, you might pay $15 to $25 just to get the cash. Some cards charge a flat fee instead of a percentage — for example, $10 per advance no matter the amount.
The cash advance APR is almost always higher than your purchase APR. If your card charges 18 percent APR on purchases, the cash advance rate might be 24 or 28 percent. This rate applies from the moment you withdraw the money, with no grace period. A purchase has a grace period (usually 21 days) where no interest accrues if you pay in full by the due date. A cash advance does not.
If you withdraw $500 at a 25 percent APR and pay it back in 30 days, you will owe roughly $10 in interest alone, plus the upfront fee. Over a year, that same $500 would cost you about $125 in interest.
How a cash advance affects your credit score
Taking a cash advance does not directly hurt your credit score the way a late payment does. However, it increases your credit utilization ratio — 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 can lower your score slightly, especially if you carry the balance for several months.
The bigger risk is that a cash advance makes it easier to fall behind on payments. Because interest accrues when ready and the balance grows every day, people often underestimate how much they owe. A missed payment will damage your score far more than the utilization itself.
When a cash advance makes sense (and when it does not)
A cash advance is rarely the right choice, but there are narrow situations where it might be the least bad option. If you need cash for an emergency and have no other way to get it — no savings, no family to borrow from, no access to a credit union loan — a cash advance is faster than a personal loan process. You get the money in minutes instead of days.
But if you have time, almost any alternative is cheaper. A credit union personal loan, a bank personal loan, or even a payday loan from a credit union (not a payday lender) will charge less interest and often no upfront fee. If you have a friend or family member who can lend you the money, that is free. If you can wait a few days, a personal loan process takes longer but costs far less over time.
Do not take a cash advance to pay off another debt unless you are certain the new interest rate is lower. Do not take one to fund a purchase you cannot afford. And do not take one hoping to pay it back quickly — the interest accrues so fast that "quick" rarely happens.
How to pay back a cash advance
When you make a payment to your credit card, the issuer applies it to your lowest-interest balance first. This means if you have both purchases (at 18 percent APR) and a cash advance (at 25 percent APR), your payment goes to the purchases first, and the cash advance keeps accruing interest at the higher rate.
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, your only option is to pay down the entire card balance until the cash advance is gone.
The sooner you pay it back, the less interest you pay. If you took a $500 cash advance, make it a priority to pay it off within a month or two rather than letting it sit for six months or a year.
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 higher interest rate with an upfront fee. A balance transfer moves debt from one card to another and usually has a lower introductory rate (sometimes 0 percent for a set period). Balance transfers are meant for moving existing debt; cash advances are for getting cash. Both charge fees and have different terms, so read your card's offer carefully.
Can I take a cash advance on a debit card?
No. A debit card draws directly from your bank account, so there is no borrowing and no cash advance option. If you need cash and your debit card does not work at an ATM, you can withdraw cash at a bank teller window or use a different ATM. A cash advance is only available on credit cards.
What happens if I cannot pay back the cash advance?
The balance stays on your card and keeps accruing interest. If you miss a payment, your issuer will report it to the credit bureaus, and your credit score will drop. After several months of missed payments, the issuer may close your account and send the debt to a collection agency. Contact your issuer when ready if you cannot pay — some offer hardship programs that lower your interest rate or pause payments temporarily.
Is there a way to avoid the cash advance fee?
Not if you use the cash advance feature. The fee is built into the service. Your only option is to avoid taking a cash advance altogether and use a cheaper borrowing method instead, like a personal loan or credit union loan.
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 APR to pay off a balance at 18 percent APR, plus you pay an upfront fee. You end up paying more, not less. If you are struggling with multiple card balances, a personal loan or balance transfer to a 0 percent card is a smarter move.