Yes, you can withdraw cash from a credit card, but it is not the same as using the card to buy something
You can take cash out of an ATM using your credit card, or ask a cashier at a store to give you cash back when you make a purchase. But a cash advance — the formal term for withdrawing cash directly from your credit card — costs you money in ways a regular purchase does not. You pay an upfront fee, a higher interest rate, and interest starts accruing when ready, with no grace period like you get on regular purchases.
Most people use cash advances only when they have no other option, because the cost adds up quickly. Understanding how they work and what they cost helps you decide whether this is the right move for your situation, or whether another option makes more sense.
Key Takeaways
- A cash advance charges a fee (usually 3 to 5 percent of the amount) plus a higher interest rate than regular purchases, starting when ready.
- You can get a cash advance at an ATM using your credit card PIN, or by asking a cashier for cash back during a purchase.
- Interest on a cash advance starts the day you withdraw it, with no grace period, so the cost grows every single day until you pay it back.
- If you need cash urgently, a personal loan, payday loan, or borrowing from family may cost you less than a credit card cash advance.
What a cash advance actually costs you
When you take a cash advance, your credit card company charges you three separate costs: an upfront fee, a higher interest rate, and interest that starts right away.
The cash advance fee is usually 3 to 5 percent of the amount you withdraw, though some cards charge a flat dollar amount instead (like $10 minimum). So if you withdraw $500, you might pay $15 to $25 just to get the cash. This fee appears on your statement when ready.
The interest rate on a cash advance is higher than the rate on regular purchases. Your regular purchase APR might be 18 percent, but your cash advance APR could be 25 percent or higher. This rate varies by card and by your creditworthiness, so check your card's terms to see what yours is.
Unlike a regular purchase, interest starts accruing the moment you withdraw the cash. There is no grace period. If you take out $500 on the first of the month and pay it back on the last day of the month, you still owe interest for all 30 days. On a $500 advance at 25 percent APR, that is roughly $10 in interest alone, plus the upfront fee.
How to get a cash advance from your credit card
There are two main ways to get cash from your credit card: at an ATM or at a store checkout.
At an ATM: Insert your credit card into any ATM that accepts it (most do), enter your PIN, and select "cash withdrawal" or "cash advance." The ATM will show you the fee before you confirm. You can withdraw up to your cash advance limit, which is usually lower than your overall credit limit — often 20 to 30 percent of your total limit, though this varies by card.
At a store: When you check out, ask the cashier for cash back. Tell them the amount you want, and they will add it to your purchase total. This counts as a cash advance and carries the same fees and interest rate as an ATM withdrawal. Some stores have limits on how much cash back they will give you, so ask first.
Before you do either, call your card issuer or check your online account to find out your cash advance limit and your cash advance APR. Knowing these numbers ahead of time prevents surprises on your statement.
Why the interest adds up so fast
The combination of a higher interest rate and no grace period means the cost of a cash advance grows quickly. Here is a concrete example: if you withdraw $1,000 at a 25 percent APR with a 5 percent fee, you owe $50 upfront. If you pay back the $1,000 in 30 days, you also owe about $20 in interest. Your total cost is $70 for borrowing $1,000 for one month.
Compare that to a regular purchase: the same $1,000 at 18 percent APR with a grace period means you owe nothing if you pay the full balance when your statement is due. Even if you carry the balance for 30 days, you owe roughly $15 in interest — and you paid no upfront fee.
The longer you carry a cash advance, the worse it gets. After six months, that $1,000 cash advance at 25 percent APR costs you roughly $125 in interest alone, plus the original $50 fee. A regular purchase at 18 percent costs roughly $90 in interest over the same period.
When a cash advance might make sense
A cash advance is expensive, but there are situations where it is the least bad option. If you need cash when ready and have no other way to get it, a cash advance might cost less than the alternative — for example, a payday loan often charges 400 percent APR or more, which is far worse than a credit card cash advance.
If you use a cash advance, pay it back as fast as you can. Every day you carry the balance, interest is accumulating. Some people pay back a cash advance within a few days, treating it like a very short-term loan. The fee still stings, but the interest stays minimal.
If you find yourself needing cash advances regularly, that is a sign to look at your budget. Repeated cash advances mean you are spending more than you have, and the interest costs will compound over time.
Cheaper alternatives to a cash advance
Before you take a cash advance, consider whether one of these options might cost you less:
- A personal loan from a bank or credit union: These typically charge 6 to 36 percent APR depending on your credit, with no upfront fee and a fixed repayment schedule. The interest rate is often lower than a cash advance rate, and you know exactly how much you will pay each month.
- Borrowing from family or friends: If this is possible, it costs nothing and gives you time to repay without interest. Be clear about repayment terms to avoid misunderstandings.
- A line of credit from your bank: Some banks offer lines of credit at lower rates than credit cards, though you need to set this up before you need the money.
- Asking your employer for an advance on your paycheck: Some employers will do this at no cost, or for a small fee much lower than a cash advance.
A payday loan is cheaper than a cash advance only in rare cases, so avoid it if you can. Even though payday loans sound quick and straightforward, the APR is usually 300 to 400 percent, which is far worse than any credit card rate.
How cash advances affect your credit score
A cash advance does not directly hurt your credit score the way a missed payment does. However, it does increase your credit utilization — the amount of your available credit you are using. If you have a $5,000 credit limit and take a $1,000 cash advance, your utilization jumps to 20 percent. High utilization can lower your score slightly, especially if you already have other balances on the card.
The bigger risk is that a cash advance can be a sign you are in financial trouble, which might lead to missed payments or higher balances — and those do hurt your score. If you are considering a cash advance, it is worth asking yourself whether you need help with your overall budget or cash flow.
Frequently Asked Questions
What is the difference between a cash advance and a regular purchase?
A regular purchase has a grace period (usually 21 to 25 days) where you owe no interest if you pay the full balance by the due date. A cash advance charges interest from day one, with no grace period. Cash advances also charge an upfront fee and a higher interest rate than regular purchases.
Can I get a cash advance if my credit is bad?
Yes. If you have a credit card, you can take a cash advance up to your cash advance limit, regardless of your credit score. However, your cash advance limit is usually lower than your overall credit limit, and the interest rate may be higher if your credit is poor.
What happens if I do not pay back a cash advance?
Interest keeps accruing every day, and the balance grows. If you miss payments, your credit score drops, late fees are added, and the card issuer may increase your interest rate. Eventually, the debt could go to collections. Paying back even a small amount each month is better than letting it sit.
Is there a way to avoid the cash advance fee?
No. The fee is automatic whenever you take a cash advance, whether at an ATM or at a store. The only way to avoid it is to not take a cash advance. Some cards offer slightly lower fees than others, but all credit cards charge something for cash advances.
Can I take a cash advance from one credit card to pay another credit card?
Technically yes, but it is a bad idea. You pay the cash advance fee and interest rate on the money you withdraw, then pay regular interest on the card you are paying off. You end up paying more in fees and interest than if you just carried the balance on the original card.