ATMs do accept credit cards, but not in the way you might expect

Yes, you can insert a credit card into most ATMs. However, the machine will not let you withdraw cash using your credit card the way you would with a debit card. Instead, the ATM recognizes your card and offers you a cash advance — a short-term loan from your credit card issuer. This is a fundamentally different transaction from a debit card withdrawal, and it costs you significantly more money.

The confusion happens because ATMs look the same whether you use a debit card or a credit card. But the financial outcome is completely different. A debit card withdrawal pulls money from your bank account that you already own. A credit card cash advance borrows money from your credit card company, and you pay interest on it when ready — often at a higher rate than your regular purchase APR.

Key Takeaways

  • Credit card cash advances charge interest starting the same day you withdraw the money, with no grace period like purchases have.
  • Cash advance fees typically run 3 to 5 percent of the amount withdrawn, plus the ATM operator may charge an additional fee.
  • The interest rate on cash advances is usually higher than the rate on regular purchases, sometimes 5 to 10 percentage points above your standard APR.
  • Using a credit card at an ATM should be a last resort; alternatives like getting cash back at a store or borrowing from a friend cost far less.

How a credit card cash advance actually works

When you insert your credit card into an ATM and select "cash advance" or "withdraw cash," the ATM connects to your credit card company, not your bank. The company approves a short-term loan based on your available credit — not your bank balance. The cash comes out of the ATM, and the amount is added to your credit card balance as a new debt.

Unlike a regular purchase, which may have a grace period of 20 to 30 days before interest starts, a cash advance begins charging interest the moment you withdraw it. There is no grace period. If you withdraw $200 on a Monday, interest starts accruing on Tuesday. This is true even if you pay off the full amount the next day.

The interest rate on cash advances is set by your card issuer and appears in your card agreement under "cash advance APR." Many issuers charge a higher rate for cash advances than for purchases — sometimes 5 to 10 percentage points higher. If your purchase APR is 18 percent, your cash advance APR might be 28 percent.

The fees that make cash advances expensive

Beyond the interest rate, you face two separate fees when you use a credit card at an ATM. The first is the cash advance fee charged by your credit card company. This is typically 3 to 5 percent of the amount withdrawn, with a minimum fee of $2 to $5. If you withdraw $100, you might pay $3 to $5 just for the privilege of borrowing that money.

The second fee comes from the ATM operator — the bank or network that owns the machine. This is the same fee you pay when you use an out-of-network debit card at an ATM, usually $2 to $3. So a $100 cash advance might cost you $5 to $8 in fees alone, before any interest charges.

The total cost adds up fast. If you withdraw $200 and pay it back over three months, you might pay $15 in fees plus $12 to $18 in interest — a total cost of $27 to $33 for borrowing $200. That is equivalent to an annual interest rate far higher than the stated APR because you are paying it over a shorter time.

When ATMs will reject your credit card

Not every ATM accepts credit cards for cash advances. Many machines, especially those in small towns or inside retail stores, only accept debit cards and bank cards. The ATM will straightforward reject your credit card if it does not support cash advances.

Additionally, your credit card company may block cash advances if you have reached your credit limit, if your account is flagged for fraud, or if you have not used the card in a long time. Some issuers also set a separate, lower limit on how much you can withdraw as a cash advance — you might have $5,000 in available credit but only $500 in available cash advance credit.

If you are traveling internationally, many ATMs outside the United States will not recognize your credit card at all, or will charge much higher fees for cash advances. This is one reason travel experts recommend carrying a debit card or notifying your bank before you travel.

Cheaper ways to get cash when you need it

Before you use a credit card at an ATM, explore these alternatives that cost nothing or very little. The simplest option is to ask for cash back when you make a purchase at a grocery store, pharmacy, or gas station. Most retailers offer this service free of charge, and you can withdraw $20 to $100 depending on the store's policy.

If you have a debit card linked to your bank account, use that at an ATM instead. Debit card withdrawals cost nothing if you use your own bank's ATM, and many banks reimburse out-of-network ATM fees. If you do not have a debit card, you can visit your bank branch in person and withdraw cash from a teller — this is always free.

If you are in a true emergency and have no other option, borrowing cash from a friend or family member costs nothing and avoids both fees and interest. A short-term personal loan from a credit union or online lender, while it does charge interest, typically charges less than a credit card cash advance.

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 percentage of your available credit that you are using. If you have a $5,000 credit limit and you take a $500 cash advance, your utilization jumps to 10 percent (or higher if you already had a balance). High utilization can lower your credit score by a few points.

The bigger risk is that a cash advance can trap you in a debt cycle. Because the interest starts when ready and the rate is high, the balance grows quickly if you cannot pay it off right away. Many people who take one cash advance end up taking another to pay off the first, and the debt spirals. This pattern of repeated borrowing can eventually lead to missed payments, which do serious damage to your credit score.

Frequently Asked Questions

Can I use a credit card at an ATM without paying a cash advance fee?

No. Every credit card company charges a cash advance fee, and it is non-negotiable. The fee is typically 3 to 5 percent of the amount withdrawn. You cannot avoid it by paying back the cash advance quickly — the fee is charged at the moment you withdraw the money.

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

A regular purchase has a grace period (usually 20 to 30 days) before interest starts. A cash advance charges interest from day one. Purchases also have a lower interest rate than cash advances on the same card. Cash advances also charge an upfront fee; purchases do not.

Will my credit card company let me take out a cash advance if I am at my credit limit?

No. A cash advance counts against your available credit, so you must have room in your credit limit to borrow. Additionally, many issuers set a separate cash advance limit that is lower than your total credit limit — you might have $3,000 available for purchases but only $500 available for cash advances.

Is there a limit to how much I can withdraw as a cash advance?

Yes. Your card issuer sets a cash advance limit, which may be lower than your total credit limit. This limit varies by card and by your account history. You can find your cash advance limit in your card agreement or by calling the customer service number on the back of your card.

What happens if I cannot pay back a cash advance?

The balance stays on your credit card and continues to accrue interest at the cash advance rate. If you miss payments, your credit score will drop and you may face late fees. The debt can grow significantly if you only make minimum payments, since most of each payment goes toward interest rather than principal.