Yes, you can take cash from a credit card, but it costs more than a purchase
You can withdraw cash using your credit card at an ATM, through your bank, or at some retail stores. The transaction is called a cash advance. Unlike a purchase, a cash advance starts charging interest immediately — there is no grace period — and you pay a fee upfront, usually 3 to 5 percent of the amount you withdraw.
The interest rate on a cash advance is also typically higher than your regular purchase APR. If your card charges 18 percent APR on purchases, the cash advance rate might be 24 percent or more. That combination of an upfront fee plus daily interest makes cash advances one of the most expensive ways to borrow money on a credit card.
Key Takeaways
- Cash advances charge an upfront fee (usually 3 to 5 percent) plus a higher interest rate than purchases, with interest starting immediately.
- You can withdraw cash at an ATM using your PIN, through your bank teller, or sometimes at a retail store customer service desk.
- Your credit card company sets a separate cash advance limit, which may be lower than your overall credit limit.
- The interest and fees on a cash advance are separate from your purchase balance and may have their own payment schedule.
- If you need cash, a personal loan, payday loan alternative, or borrowing from family typically costs less than a credit card cash advance.
Where and how to withdraw cash from your credit card
The easiest method is to use an ATM. Insert your credit card, enter your PIN (which you may need to set up if you have not used a cash advance before), and withdraw the amount you need. The ATM will show you the fee before you confirm the transaction.
You can also visit your credit card issuer's bank branch and ask a teller for a cash advance. Bring your card and ID. This method works even if you do not have an account at that bank, though some banks charge an additional fee for non-customers.
Some retail stores — typically grocery stores and pharmacies — allow you to withdraw cash at the register when you use your credit card. The process is the same as getting cash back on a debit card, though not all retailers offer this option and some charge a fee.
Understanding cash advance limits and fees
Your credit card company sets a cash advance limit separate from your overall credit limit. You might have a $5,000 credit limit but only a $1,500 cash advance limit. Check your card's terms or call the customer service number on the back of your card to find out what yours is.
The upfront fee is non-negotiable and appears on your statement as a separate charge. A $300 cash advance with a 4 percent fee costs you $12 immediately. Some cards charge a flat fee instead (for example, $5 per advance) — compare which is cheaper for the amount you need.
Interest accrues daily from the moment you withdraw the cash. If you pay back the full amount within a few days, the interest charge is small. If the balance sits for weeks or months, the interest compounds quickly and can exceed the original fee.
How cash advances affect your credit and payment schedule
A cash advance counts as a balance on your credit card and affects your credit utilization ratio — 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, which can lower your credit score slightly.
The cash advance balance is usually treated separately from your purchase balance on your statement. If you make a payment, your card company typically applies it to the lowest-interest balance first (usually purchases), leaving the cash advance to accrue interest longer. Check your statement to see how payments are allocated.
Some cards allow you to pay the cash advance balance separately or let you choose where your payment goes. Call your card issuer to ask if you can direct payments toward the cash advance specifically.
When a cash advance makes sense and when it does not
A cash advance rarely makes financial sense unless you are in a genuine emergency and have no other option. The fee plus interest can cost 5 to 10 percent of the amount borrowed within the first month alone.
If you need cash for an unexpected expense, consider these alternatives first: asking family or friends for a short-term loan, using a credit union personal loan (which typically charges 6 to 18 percent APR), or looking into a payday loan alternative like an employer advance or a credit union payday loan program. Even a payday loan, which is expensive, often costs less than a credit card cash advance if you repay it within two weeks.
A cash advance might be unavoidable if you need cash immediately and have exhausted other options. In that case, withdraw only what you need and pay it back as quickly as possible to minimize interest charges.
How to pay back a cash advance quickly
The fastest way to reduce the cost is to pay the balance in full as soon as you can. Every day the balance sits, interest accumulates at a daily rate. If you borrowed $500 at a 25 percent APR, you are paying roughly $0.34 per day in interest — small individually but significant over weeks.
Make a payment above your minimum as soon as possible. If your card allows you to direct payments to the cash advance balance, do that. If not, pay more than the minimum to ensure some of your payment goes toward the cash advance instead of just the purchase balance.
Track the cash advance separately from your regular spending. Do not treat it as part of your available credit for new purchases. The goal is to eliminate it, not to carry it alongside other debt.
Frequently Asked Questions
What is the difference between a cash advance and a regular purchase on a credit card?
A purchase has a grace period (usually 21 days) before interest starts. A cash advance charges interest from day one. Purchases also have a lower APR, while cash advances charge a higher rate plus an upfront fee. Interest on a cash advance typically accrues faster.
Can I use a credit card cash advance to pay another credit card bill?
Technically yes, but it is a costly way to move debt around. You pay the cash advance fee and high interest rate to get the cash, then use it to pay another card. You end up paying more in fees and interest than if you had made a regular payment or transferred the balance instead.
What happens if I cannot pay back the cash advance?
The balance stays on your card and continues to accrue interest. It will be reported to credit bureaus and damage your credit score. Your card issuer may also increase your interest rate on all balances or lower your credit limit. If the debt goes unpaid long enough, the card company may send it to a collection agency.
Is there a way to avoid the cash advance fee?
No. The fee is set by your card issuer and applies to every cash advance. You cannot negotiate it or waive it. The only way to avoid it is to not take a cash advance.
Can I take a cash advance on a prepaid card or gift card?
Most prepaid and gift cards do not offer cash advances. Some prepaid cards issued by banks or credit unions may allow it, but the fees and terms vary widely. Check your card's terms or contact the issuer to ask.