What it means to take cash out of a credit card

Taking cash out of a credit card is called a cash advance. You go to an ATM, a bank teller, or a check-cashing service and withdraw money using your credit card, just as you would with a debit card. The money appears in your hand or bank account within minutes or hours. But unlike a debit card withdrawal, which pulls from money you already have, a cash advance borrows money from your credit card issuer — and that borrowed money costs you significantly more than a regular purchase.

The extra cost comes in three forms: an upfront fee (usually 3 to 5 percent of the amount you withdraw), a higher interest rate than your regular purchases earn, and interest that starts accruing when ready with no grace period. A $200 cash advance can cost you $6 to $10 just to take it out, plus interest from day one. For that reason, cash advances are almost never the cheapest way to get cash, and most people should explore other options first.

Key Takeaways

  • A cash advance charges you an upfront fee (typically 3 to 5 percent) plus a higher interest rate than purchases, with interest starting when ready.
  • You can withdraw cash at an ATM using your credit card PIN, at a bank teller, or through a cash-back option at a store checkout.
  • The interest rate on a cash advance is usually 2 to 5 percentage points higher than your purchase rate, and no grace period applies.
  • Alternatives like a personal loan, borrowing from family, or using a debit card are cheaper in almost every situation.
  • If you do take a cash advance, pay it back as quickly as possible because interest compounds daily.

The three ways to withdraw cash using your credit card

The most common method is an ATM withdrawal. You insert your credit card into any ATM that displays your card's logo (Visa, Mastercard, American Express, or Discover), enter your PIN, and select the cash advance option. The ATM will show you the fee upfront before you confirm. The money comes out when ready, and the transaction appears on your credit card statement within one to three business days.

The second method is a bank teller withdrawal. You can walk into any bank branch (not necessarily your own bank) and ask the teller for a cash advance on your credit card. You'll need your card and a photo ID. The teller will process the transaction, charge you the fee, and hand you cash on the spot. This method works even if you don't have a PIN set up for your card.

The third method is cash back at a store. Some retailers (grocery stores, pharmacies, and big-box stores) let you request cash back when you pay with a credit card. You make a purchase, and the cashier asks if you want cash back. The amount is added to your total bill. This method usually has no fee or a smaller fee than an ATM, but you must make a purchase to use it, and the amount is limited (often $20 to $100).

What the fees and interest rates actually cost you

Every cash advance comes with an upfront cash advance fee, charged the moment you withdraw the money. This fee is typically 3 to 5 percent of the amount withdrawn, though some cards charge a flat fee (like $5 or $10) if that's higher. A $300 cash advance at 4 percent costs $12 when ready. A $1,000 advance at 5 percent costs $50 before you've even spent a day with the money.

On top of the fee, the cash advance carries a higher interest rate than your regular purchases. If your card charges 18 percent APR on purchases, the cash advance rate might be 23 or 24 percent. This rate varies by card and by issuer — check your cardholder agreement or call the number on the back of your card to find out your specific rate.

The most painful part is that interest starts accruing when ready. With a regular purchase, you get a grace period (usually 21 to 25 days) before interest kicks in. With a cash advance, interest starts the day you withdraw the money. If you withdraw $500 at 24 percent APR, you owe roughly $3.29 in interest after just one day. After 30 days, you owe about $100 in interest alone, on top of the original fee.

To see the real cost: a $500 cash advance at 5 percent fee plus 24 percent APR, paid back over three months, costs you roughly $75 in fees and interest combined. The same $500 borrowed through a personal loan at 12 percent APR over three months costs roughly $20 in interest. The credit card cash advance costs nearly four times as much.

Why you should avoid cash advances if you can

Cash advances are expensive by design. The fees and interest rates are structured so that the credit card company makes money quickly, which means you lose money quickly. If you need cash, almost any other option is cheaper.

A personal loan from a bank, credit union, or online lender typically charges 6 to 36 percent APR depending on your credit, with no upfront fee. Even at the high end, the interest rate is lower than a cash advance, and you don't pay a percentage fee on top. A credit union loan is often cheaper still if you're a member.

Borrowing from family or friends costs nothing if they don't charge interest, and even if they do, you can negotiate a rate far lower than a credit card cash advance. Using a debit card or your own savings avoids borrowing altogether. If you have a line of credit through your bank (separate from your credit card), that usually charges less than a cash advance.

The only situation where a cash advance makes sense is when you need cash when ready, have no other option, and can pay it back within days rather than weeks. Even then, the cost is real and steep.

How cash advances affect your credit score

A cash advance doesn't directly hurt your credit score the way a missed payment does. However, it can harm your score indirectly by raising your credit utilization ratio — the percentage of your available credit you're using. If you have a $5,000 credit limit and take a $1,000 cash advance, your utilization jumps to 20 percent. Credit scoring models penalize high utilization, so your score may drop a few points.

The bigger risk is that a cash advance can become a debt spiral. If you can't pay it back quickly, the high interest rate means the balance grows faster than a regular purchase would. A growing balance raises your utilization even more, which hurts your score further. If you eventually miss a payment, that's a serious mark on your credit report.

For this reason, only take a cash advance if you're confident you can pay it back within one or two billing cycles. The longer it sits, the more it costs and the more it damages your credit profile.

Steps to take a cash advance if you decide to proceed

Before you withdraw, call the number on the back of your credit card and confirm three things: your cash advance limit (which may be lower than your overall credit limit), your cash advance interest rate, and your cash advance fee. Write these down so you know exactly what you'll pay.

Next, decide which method to use. If you need the cash when ready and have a PIN, use an ATM. If you don't have a PIN or prefer not to use an ATM, visit a bank teller. If you can make a small purchase, use cash back at a store — it often has a lower fee or no fee at all.

Go to the ATM, teller, or store and complete the transaction. The fee will be shown or stated before you confirm. Once you have the cash, treat it as a debt you need to pay back as soon as possible. Don't spend it on non-essentials or things you were already planning to buy with other money — that turns the cash advance into a way to finance purchases you couldn't otherwise afford, which is how people end up trapped in high-interest debt.

Pay the balance down on your next statement or sooner. Every dollar you pay back when ready is a dollar that stops accruing interest. If you took a $500 advance and can pay back $250 within a week, do it. The faster you pay, the less the cash advance costs you overall.

Frequently Asked Questions

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

No. A cash advance counts against your credit limit, just like a purchase does. If you've used your entire limit, you can't take a cash advance. Some cards also set a separate, lower cash advance limit — for example, your overall limit might be $5,000 but your cash advance limit might be $1,000. You can only withdraw up to that lower limit.

What happens if I don't pay back a cash advance?

The balance stays on your credit card and interest keeps accruing daily at your cash advance rate. If you miss a payment, the card issuer reports it to the credit bureaus, which damages your credit score. After 30 days of missed payments, the card issuer may charge you a late fee. After 180 days, they may close your account and send the debt to a collection agency.

Is there a difference between a cash advance and a balance transfer?

Yes. A balance transfer moves debt from one credit card to another (usually to take advantage of a lower interest rate). A cash advance withdraws actual cash. Balance transfers have their own fees and rates, but they're structured differently and serve a different purpose.

Can I take a cash advance from a credit card I just opened?

Usually yes, but some card issuers restrict cash advances for new cardholders or charge a higher fee for the first 30 to 60 days. Check your cardholder agreement or call the issuer to confirm. Even if you can, the reasons to avoid a cash advance explore just as strongly to a new card.

What if I need cash but don't have a PIN for my card?

Visit a bank teller instead of an ATM. You can request a cash advance at any bank branch with your credit card and a photo ID, and the teller will process it without a PIN. You'll still pay the same fee and interest rate as an ATM withdrawal.