A cash advance is borrowing money directly from your credit card issuer, not from an ATM or store

When you take a cash advance, you are withdrawing cash using your credit card at an ATM, bank, or through a cash advance check. The money comes from your credit card's available balance, just like a purchase would. But the card issuer treats it differently: you pay interest when ready, there is no grace period, and the interest rate is usually higher than your purchase rate.

The process itself is straightforward. You insert your card at an ATM, select "cash advance" or "withdrawal," enter your PIN, and take the cash. Some banks let you request a cash advance at a teller window. A few card issuers still mail checks linked to your account that you can deposit or cash. Within days, the advance appears on your statement as a separate line item, with its own interest rate and its own minimum payment calculation.

Key Takeaways

  • Cash advances charge interest from the day you withdraw the money, with no interest-free period like purchases have.
  • The interest rate on a cash advance is typically 3 to 5 percentage points higher than your purchase APR, and varies by card issuer and your creditworthiness.
  • Most card issuers charge an upfront fee of 3 to 5 percent of the amount withdrawn, on top of the interest.
  • Your credit card's cash advance limit is usually lower than your overall credit limit, and you can find it in your card agreement or by calling the issuer.
  • Paying off a cash advance takes longer because your minimum payment covers all balances, not the cash advance first.

How the interest and fees work

Interest on a cash advance starts accruing the moment you withdraw the money. Unlike a purchase, which typically has a 21 to 25-day grace period before interest kicks in, a cash advance has zero grace period. If you withdraw $500 on Monday and pay it back on Friday, you still owe interest for those five days.

The interest rate itself is higher than your purchase rate. If your card charges 18 percent APR on purchases, the cash advance rate might be 23 or 24 percent. The exact rate depends on your card issuer and your credit history. You can find your cash advance APR in your card agreement or by logging into your online account.

On top of the interest, you pay an upfront fee. Most card issuers charge 3 to 5 percent of the amount you withdraw. A $500 cash advance might cost you $15 to $25 just to get the money, before any interest accrues. Some cards charge a flat fee instead—say, $10 per advance—but this is less common.

What your cash advance limit is and how to find it

Your cash advance limit is separate from your overall credit limit. If your card has a $5,000 limit, your cash advance limit might be $1,000 or $1,500. The issuer sets this limit based on your creditworthiness and account history, and it is usually lower than your purchase limit because cash advances are riskier for the lender.

You can find your cash advance limit by logging into your online account, calling the customer service number on the back of your card, or checking your most recent statement. Some issuers list it under "cash advance limit" or "ATM withdrawal limit." If you do not see it, ask the representative directly—they can tell you in seconds.

If you try to withdraw more than your limit, the ATM or teller will decline the transaction. You cannot exceed it, even if you have room left on your overall credit limit.

Where you can get a cash advance

ATMs are the most common place. You can use your credit card at most ATMs that accept Visa or Mastercard, though you may pay an additional ATM operator fee on top of your card issuer's fee. Some ATMs charge $2 to $4 just to use the machine, so a $100 withdrawal could cost you $8 to $12 before interest.

Banks and credit unions also offer cash advances at the teller window. If your card is issued by your own bank, this is often free of the ATM operator fee, though you still pay the card issuer's fee and interest. Some card issuers mail you checks that function as cash advances—you deposit or cash the check, and the amount is charged to your card.

Convenience stores, casinos, and other merchants sometimes offer cash advances at the register, but these almost always charge higher fees than ATMs. Avoid them unless you have no other option.

How paying back a cash advance works

When you have both a purchase balance and a cash advance balance on your card, your minimum payment covers both. The card issuer does not prioritize the cash advance—it applies your payment proportionally to each balance, or sometimes to the purchase first (which is better for you, since the cash advance interest rate is higher).

To pay off the cash advance faster, you need to pay more than the minimum. If you pay $200 toward a card with a $300 purchase balance and a $200 cash advance balance, the issuer might explore $100 to each, leaving you paying interest on both. To eliminate the cash advance, you have to pay it down deliberately.

Some people make a separate payment specifically for the cash advance balance, which some issuers allow you to do through their online portal or by phone. Check your account to see if this option is available.

When a cash advance makes sense and when it does not

A cash advance is expensive, so it only makes sense in specific situations. If you need cash for an emergency and have no other source—no savings, no access to a personal loan, no friends or family to borrow from—a short-term cash advance might be better than missing a bill payment or bouncing a check. The key is to pay it back as quickly as possible, within days if you can.

A cash advance does not make sense for everyday spending or planned expenses. If you know you need cash next week, transfer money from savings or use your debit card instead. If you are considering a cash advance to pay another credit card or to cover a shortfall in your budget, that signals a deeper problem that a cash advance will only make worse.

Some people use cash advances to take advantage of a 0 percent balance transfer offer on a new card, but this almost never works—the cash advance fee and interest rate explore regardless of any promotional offer on purchases.

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—the percentage of your available credit you are using. If you have a $5,000 limit and take a $1,000 cash advance, your utilization jumps to 20 percent. High utilization can lower your score by a few points, especially if you are already using a lot of your other cards.

The bigger risk is that a cash advance can become a habit. If you keep taking advances and paying them off slowly, your utilization stays high and your score stays depressed. If you miss a payment on the cash advance, that shows up on your credit report and damages your score significantly.

Frequently Asked Questions

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

Technically yes, but it is a bad idea. You pay the cash advance fee and interest rate on the amount you transfer, which is usually higher than the interest rate on the card you are paying off. You end up paying more, not less. If you are trying to consolidate debt, a personal loan or balance transfer card (which charges a one-time fee but then offers 0 percent interest for a period) is cheaper.

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

A balance transfer moves debt from one card to another and often comes with a promotional 0 percent interest rate for 6 to 21 months. A cash advance gives you cash and charges interest from day one. Balance transfers are for moving existing debt; cash advances are for getting cash. The fees and terms are completely different.

Will my bank let me take a cash advance if I am close to my credit limit?

It depends on your cash advance limit, which is separate from your overall limit. You could be at 90 percent of your total credit limit but still have room for a cash advance. Check your cash advance limit first—if you have $500 available for advances and only $100 left on your overall limit, you can still take the $500 advance.

How long does a cash advance stay on my credit report?

The cash advance itself does not appear on your credit report as a separate item. Only the balance on your credit card shows up. If you pay the cash advance on time, it has no impact on your credit history. If you miss a payment, the missed payment shows up and stays on your report for seven years.

Can I get a cash advance from a credit card I do not have in my wallet?

No. You need the physical card or, in some cases, your card number and PIN. You cannot request a cash advance by phone or online on most cards. Some issuers allow you to request a cash advance check by mail, but you still cannot withdraw cash without the card itself or a check issued in your name.