A cash advance lets you borrow money against your credit limit at an ATM or bank

A cash advance is when you use your credit card to withdraw cash instead of making a purchase. You go to an ATM, a bank teller, or sometimes a convenience store, insert your card, and take out money. The amount you withdraw counts against your credit limit, just like a purchase does — but the terms are usually much worse. You pay a fee upfront (often 3 to 5 percent of what you withdraw), and the interest rate is typically higher than your regular purchase rate, sometimes 25 to 30 percent or more. Interest starts accruing when ready, with no grace period like you might have on a purchase.

Most people use cash advances when they need physical money and have no other way to get it — to pay a contractor who won't take a card, to cover an emergency expense at a place that doesn't accept cards, or because they've run out of other options. It is rarely the cheapest way to borrow money, so understanding the real cost before you do it matters.

Key Takeaways

  • Cash advances charge an upfront fee (typically 3 to 5 percent) plus a higher interest rate than purchases, with no grace period.
  • You can get a cash advance at an ATM using your PIN, at a bank teller with your card and ID, or sometimes at a convenience store.
  • The interest you owe starts the day you withdraw the money, so the longer you carry the balance, the more it costs.
  • A personal loan, payday loan alternative, or even a credit card balance transfer may cost less than a cash advance, depending on your situation.

Where you can withdraw a cash advance

The easiest place to get a cash advance is an ATM. Insert your credit card, enter your PIN (which you may need to set up if you haven't used one before), and withdraw the amount you need. Most ATMs will let you take out up to your available credit, though some have daily limits. You will see the fee charged right there on the screen before you confirm the withdrawal.

You can also go to a bank branch — yours or any bank, not just the one that issued your card. Bring your credit card and a photo ID. The teller will process the advance and give you cash. This method sometimes has lower fees than an ATM, so it is worth asking the teller what the fee will be before you proceed.

Some convenience stores, grocery stores, and casinos also offer cash advances, though the fees tend to be higher. Always ask what the fee is before you authorize the transaction.

The fees and interest you will pay

When you take a cash advance, you pay two costs: an upfront fee and interest. The upfront fee is usually a flat amount (like $5 to $10) or a percentage of the amount you withdraw (typically 3 to 5 percent). A $300 advance with a 5 percent fee costs you $15 right away. This fee is added to your balance when ready.

The interest rate on a cash advance is separate from your purchase rate. While your regular purchases might have an APR of 18 percent, your cash advance APR might be 28 percent. More importantly, interest starts accruing the day you withdraw the money — there is no grace period. If you carry a $300 cash advance at 28 percent APR for one month, you owe roughly $7 in interest alone, on top of the $15 fee you already paid.

Your credit card statement will show the cash advance as a separate line item from your purchases. When you make a payment, the card issuer typically applies it to your lowest-interest balance first (usually purchases), so your cash advance balance can sit and grow interest for longer.

How to set up your PIN if you do not have one

To use an ATM for a cash advance, you need a PIN. If you have never set one up, contact your credit card issuer — you can usually do this by calling the number on the back of your card, logging into your online account, or using the card issuer's mobile app. The process takes a few minutes, and your PIN is typically active within a day.

Write down your PIN somewhere safe (not on the card itself). If you forget it, you can reset it through the same methods — by phone, online, or through the app.

Cheaper alternatives to a cash advance

Before you take a cash advance, consider whether another option costs less. A personal loan from a bank or credit union usually has a lower interest rate than a cash advance and no upfront fee. You get the money in your bank account (not as cash), but if you can use a bank transfer or debit card to pay what you need, this is often cheaper. A personal loan also has a fixed repayment schedule, so you know exactly when you will be done paying.

If you have a second credit card with a lower interest rate, a balance transfer might work. You transfer the amount you need from your high-rate card to the low-rate card. Balance transfers do charge a fee (usually 3 to 5 percent), but if the new card's rate is much lower and you pay off the balance quickly, you may come out ahead. Some cards offer a 0 percent introductory rate on balance transfers for a set period.

If you need cash specifically, a payday loan alternative — such as a credit union loan or a small personal loan — may have a lower rate than a cash advance, though you should read the terms carefully. Avoid payday loans from non-bank lenders, which often charge rates of 400 percent APR or higher.

If the amount is small and you can wait a few days, borrowing from a friend or family member, or selling something you own, costs nothing.

What happens if you cannot pay back the cash advance

If you carry a cash advance balance and do not pay it off, the interest keeps growing. Unlike a purchase, there is no grace period, so interest accrues every single day. After 30 days of non-payment, the card issuer will report the late payment to the credit bureaus, which will lower your credit score. After 60 or 90 days, the card issuer may close your account or refer the debt to a collection agency.

If you are struggling to pay back a cash advance, contact your card issuer as soon as possible. Some issuers offer hardship programs that lower your interest rate or let you pause payments temporarily. It is better to call before you miss a payment than after.

How long a cash advance stays on your credit report

A cash advance itself does not appear on your credit report — only your overall credit card balance and payment history do. However, if you miss payments on the cash advance, that late payment will show up on your credit report and stay there for seven years. A single late payment can lower your credit score by 100 points or more, depending on your current score and payment history.

Paying the cash advance on time does not hurt your credit score, but carrying a high balance (whether from a cash advance or purchases) can lower your score because it raises your credit utilization ratio — the percentage of your available credit you are using.

Frequently Asked Questions

Can I get a cash advance if my credit card is maxed out?

No. A cash advance counts against your available credit, so you can only withdraw up to the amount of credit you have left. If your card is maxed out, you have no available credit for a cash advance. You would need to pay down your balance first.

Does taking a cash advance hurt my credit score?

Taking a cash advance itself does not hurt your score, but it raises your credit utilization ratio — the percentage of your credit limit you are using. If this ratio gets high (above 30 percent), it can lower your score slightly. Paying the advance back on time will bring your score back up.

What is the difference between a cash advance and a purchase?

A purchase has a grace period (usually 21 days) before interest starts, while a cash advance charges interest when ready. A purchase typically has a lower interest rate, and a cash advance charges an upfront fee. Both count against your credit limit.

Can I use a cash advance to pay off another debt?

Technically yes, but it is usually a bad idea. You would be paying a cash advance fee and high interest rate to pay off another debt, which costs more than just paying the original debt. A personal loan or balance transfer is almost always cheaper.

How quickly does a cash advance show up on my credit card statement?

A cash advance usually shows up within one to three business days. The fee appears when ready, but the transaction itself may take a day or two to post, depending on your card issuer and the time of day you withdrew the money.