What a credit card cash advance is and how it works

A cash advance is a withdrawal of cash from your credit card account, treated as a loan against your available credit. You get the money when ready — usually within minutes at an ATM or from a teller — but you pay interest on it from day one, often at a higher rate than your regular purchase APR. There is no grace period. Interest starts accruing the moment you withdraw the cash.

The process is straightforward: you use your credit card at an ATM, visit a bank branch, or call your card issuer to request the advance. The amount you can withdraw is limited by your cash advance limit, which is typically lower than your total credit limit and is set by your card issuer. The money goes into your bank account or your hand, and the balance appears on your next credit card statement as a separate line item.

Cash advances are different from balance transfers, which move debt from one card to another, and different from using your card to buy something. The issuer treats cash advances as a distinct type of transaction with its own terms, fees, and interest rate.

Key Takeaways

  • Cash advances charge interest from the day you withdraw the money, with no grace period, and the interest rate is usually higher than your purchase APR.
  • You pay an upfront fee — typically 3 to 5 percent of the amount withdrawn — in addition to interest charges.
  • Your cash advance limit is separate from your credit limit and is usually much lower; you can find it in your account details or by calling your issuer.
  • You can get a cash advance at an ATM, bank branch, or by phone, and the money is available within minutes to hours.
  • Cash advances report to credit bureaus as debt and can lower your credit score if they push your overall credit utilization higher.

Fees and interest rates for cash advances

Every cash advance comes with two costs: an upfront fee and ongoing interest. The cash advance fee is charged when ready and ranges from 3 to 5 percent of the amount you withdraw, with a minimum fee of $5 to $10 at most issuers. A $300 advance at 5 percent costs $15 in fees alone. This fee is added to your balance right away.

The cash advance APR — the annual interest rate — is separate from your purchase APR and is almost always higher. While a rewards card might charge 18 percent APR on purchases, the same card could charge 24 to 28 percent on cash advances. Some issuers charge the same rate for both; check your card's terms to know yours. Interest accrues daily on the full amount you withdrew, starting when ready. There is no 21-day grace period like there often is for purchases.

Because interest starts accruing right away and the rate is high, a cash advance is expensive to carry. Borrowing $500 at 25 percent APR costs roughly $10 per month in interest alone, before you pay down the principal. If you need cash, a personal loan or credit line typically costs less.

Where and how to get a cash advance

You have three main routes to withdraw cash from your credit card. The most common is an ATM — you insert your card, enter your PIN, and withdraw up to your cash advance limit. Most ATMs accept credit cards, though some charge an additional ATM operator fee ($2 to $3) on top of your card issuer's cash advance fee. This fee appears on your statement separately.

The second route is a bank branch. Walk into any bank or credit union, tell the teller you want a cash advance on your credit card, and they will process it. This method is slower than an ATM but avoids ATM operator fees. Some branches may ask for ID or require you to be a customer of that bank, though many will serve non-customers.

The third route is to call your card issuer directly. You can request a cash advance by phone, and the issuer will deposit the money into your bank account within one to two business days. This method is useful if you do not have when ready access to an ATM or branch, though you lose the speed of in-person withdrawal. Some issuers also offer cash advances through their mobile app.

Before you attempt a cash advance, check your cash advance limit. This limit is set by your issuer and is usually 20 to 50 percent of your credit limit. You can find it in your online account, on your statement, or by calling customer service. Trying to withdraw more than your limit will be declined.

Cash advance limits and how they are set

Your cash advance limit is the maximum amount you can withdraw at one time or over a billing cycle. It is not the same as your credit limit. A card with a $5,000 credit limit might have a cash advance limit of only $1,000. The issuer sets this limit based on your credit score, payment history, and account age — the same factors that determine your credit limit, but applied more conservatively.

Most issuers do not let you change your cash advance limit yourself. You can call customer service and ask for an increase, but the issuer will review your account and decide whether to grant it. Some cards allow you to set a lower limit for security, but raising it requires a phone call and a review.

If you hit your cash advance limit, you cannot withdraw more until you pay down the balance. Payments to your cash advance balance go toward the cash advance first, not toward other balances on the card. This means if you carry a purchase balance and a cash advance balance, your payment will reduce the cash advance first, leaving the higher-interest purchase balance untouched — the opposite of what you might expect.

How cash advances affect your credit score

A cash advance does not hurt your credit score directly, but it can lower your score indirectly by raising your credit utilization ratio. Credit utilization is the percentage of your available credit that you are using. If you have a $5,000 credit limit and a $2,000 cash advance, your utilization jumps to 40 percent. Credit bureaus see higher utilization as higher risk, and your score may drop by 10 to 50 points depending on how much you borrowed and what your utilization was before.

The impact is temporary. Once you pay off the cash advance, your utilization drops and your score recovers. Paying down the balance quickly — within a month or two — minimizes the damage. Carrying a cash advance balance for months will keep your score depressed for as long as you carry it.

Cash advances also appear on your credit report as a separate transaction type, which issuers and lenders can see. This does not directly affect your score, but it signals to future lenders that you have borrowed cash against your credit, which some view as a sign of financial stress.

When a cash advance makes sense and when it does not

A cash advance is rarely the cheapest way to borrow money, but there are narrow situations where it is the fastest option. If you need cash for an emergency and have no other way to get it — no savings, no access to a personal loan, no time to wait for a check — a cash advance gets you money in minutes. The cost is high, but speed has value in a true emergency.

A cash advance does not make sense if you have other options. A personal loan from a bank or credit union typically charges 8 to 15 percent APR and has no upfront fee. A credit line or home equity line of credit is even cheaper. A payday loan, while predatory, is sometimes cheaper than a cash advance if you repay it within two weeks. Even a balance transfer to a 0 percent introductory APR card is better if you have time to explore.

Do not use a cash advance to pay bills, buy groceries, or cover regular expenses. The interest and fees make it an expensive way to float money. If you are regularly using cash advances to cover living expenses, that signals a deeper cash flow problem that a cash advance will only worsen.

How to pay off a cash advance quickly

The fastest way to minimize the cost of a cash advance is to pay it off as soon as possible. Interest accrues daily, so every day you carry the balance costs you money. If you borrowed $500 at 25 percent APR, paying it back in one month costs roughly $10 in interest. Paying it back in three months costs roughly $30. The difference is significant.

When you make a payment to your card, the issuer applies it to your balances in a specific order set by law. Payments go first to the balance with the highest APR, which is usually your cash advance. This is good — it means your payment reduces the most expensive debt first. However, if you have both a cash advance and a purchase balance, confirm with your issuer how payments are applied, because the rules vary slightly by state.

If you cannot pay off the entire cash advance at once, pay as much as you can as soon as you can. Even a partial payment reduces the daily interest charge. Set a target payoff date — ideally within 30 days — and work backward to figure out how much you need to pay each week.

Frequently Asked Questions

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

Yes, you can withdraw cash and use it to pay another card, but this is expensive and defeats the purpose. You pay the cash advance fee and interest on the withdrawn amount, then use that cash to pay down a different card. You are paying two sets of fees and interest to move money between cards. A balance transfer — moving debt directly from one card to another — is cheaper if the receiving card offers a 0 percent introductory APR.

What happens if I do not pay back a cash advance?

The cash advance balance stays on your credit card and continues to accrue interest at your cash advance APR. If you miss payments, your issuer will charge late fees, your interest rate may increase, and your credit score will drop. After 180 days of missed payments, the issuer may charge off the account and sell the debt to a collection agency. The debt can then be reported to credit bureaus for up to seven years.

Is there a limit to how many cash advances I can take?

You can take multiple cash advances up to your cash advance limit, but each one incurs a separate fee and starts accruing interest when ready. Some issuers limit you to one cash advance per day or per billing cycle, though most do not. Check your card's terms or call customer service to learn your issuer's policy.

Do cash advances show up on my bank statement?

No. A cash advance is a transaction on your credit card account, not your bank account. It appears on your credit card statement as a separate line item labeled "cash advance" or "ATM withdrawal." If you withdraw cash at an ATM and deposit it into your bank account, the deposit shows on your bank statement, but the source (credit card cash advance) does not.

Can I get a cash advance if I have a bad credit score?

Yes, as long as your card is open and active. Your cash advance limit is set based on your creditworthiness, so a lower credit score means a lower cash advance limit, but you can still withdraw up to that limit. If your card has been closed or your account is in default, you cannot take a cash advance.