A cash advance is money you borrow against your credit card's line of credit, taken out as cash instead of a purchase

When you use a cash advance, you're withdrawing money from an ATM, bank teller, or convenience store using your credit card. The card issuer lends you the cash when ready, and you repay it like any other credit card balance—but with different terms and fees than regular purchases.

Cash advances are not information programs. They come with upfront costs (a fee charged at the time of withdrawal), a higher interest rate than your regular purchase rate, and interest that starts accruing when ready with no grace period. For most people, a cash advance is an expensive way to borrow, and should only be used when you have no other option.

Key Takeaways

  • Cash advances charge an upfront fee (usually 3 to 5 percent of the amount withdrawn) plus a higher interest rate than purchases, with no grace period.
  • Interest on a cash advance begins the day you withdraw it, not at the end of your billing cycle like purchases do.
  • You can obtain a cash advance at an ATM, bank branch, or convenience store by using your credit card and PIN.
  • The total cost of a cash advance grows quickly because of the combination of fees and daily interest, making it one of the most expensive ways to borrow on a credit card.

How to get a cash advance

You have three main ways to withdraw cash against your credit card. The most common is using an ATM: insert your card, enter your PIN, select "cash advance" or "withdraw cash," and choose your amount. The ATM will show you the fee before you confirm.

You can also visit a bank branch (yours or any bank) and ask the teller for a cash advance. Bring your card and ID. Some convenience stores and check-cashing outlets offer cash advances too, though fees are often higher at these locations.

Before you withdraw, check your card's cash advance limit. This is separate from your credit limit and is often lower—sometimes 20 to 30 percent of your total credit limit. Your card issuer sets this limit, and you can call to ask what yours is.

The fees and interest rates you'll pay

Every cash advance comes with an upfront fee charged at the time of withdrawal. This fee is typically 3 to 5 percent of the amount you withdraw, though some cards charge a flat dollar amount instead (like $10 minimum). A $500 cash advance at 4 percent costs $20 in fees alone.

The interest rate on cash advances is higher than your purchase rate. While a purchase might carry an APR of 18 percent, a cash advance on the same card might be 25 percent or higher. This rate varies by card and by your creditworthiness.

Interest starts accruing the moment you withdraw the cash—there is no grace period like there is for purchases. If you carry a balance, interest compounds daily. A $500 cash advance at 25 percent APR costs about $3.42 in interest per day.

How cash advances affect your credit and account

A cash advance shows up on your credit card statement as a separate line item from purchases. It counts toward your total credit card balance and affects your credit utilization ratio—the percentage of your available credit you're using. High utilization can lower your credit score.

When you make a payment to your credit card, the payment is typically applied first to purchases, then to cash advances. This means if you have both a purchase balance and a cash advance balance, your cash advance keeps accruing interest longer while you pay down the purchase first.

Cash advances do not directly appear on your credit report as a separate account type. However, they do increase your overall credit card balance, which can be visible to lenders reviewing your report.

When a cash advance makes sense (and when it doesn't)

A cash advance is rarely the right choice. It is most defensible only when you need cash when ready for an emergency and have no other source—no savings, no personal loan, no family loan, no paycheck advance from your employer. Even then, you should plan to repay it as quickly as possible.

A cash advance does not make sense if you have a credit line available, access to a personal loan, or the ability to wait a few days for a paycheck or transfer from savings. It also does not make sense if you're considering it to pay another debt, because you're straightforward moving money from one high-interest account to another.

Some people use cash advances to fund gambling, speculative investments, or purchases they cannot otherwise afford. This is a warning sign that you're borrowing beyond your means.

Alternatives to a cash advance

If you need cash, explore these options first. A personal loan from a bank or credit union typically carries a lower interest rate than a cash advance and has a fixed repayment schedule. A payday loan is expensive but sometimes cheaper than a cash advance if you can repay it within two weeks. A balance transfer to a 0 percent promotional card (if you may have access to) lets you move existing debt without new cash advance fees.

If you have a savings account, withdraw from that instead. If you have a 401(k), some plans allow loans against your balance at a low rate. If you have a trusted friend or family member, a personal loan with clear terms is often better than either a cash advance or a payday loan.

If you're facing a recurring need for emergency cash, that's a sign to build an emergency fund or explore whether a personal line of credit (separate from your credit card) might be available to you at a lower rate.

How to repay a cash advance quickly

The only strategy that works is to pay more than the minimum payment, and to do it as soon as possible. Minimum payments on credit cards are calculated to keep you in debt as long as possible—on a cash advance, they barely cover the daily interest.

If you withdrew $500 at 25 percent APR with a 4 percent fee, you owe $520 in principal plus interest. If you make only the minimum payment (often 1 to 3 percent of your balance), you'll pay interest for months. If you pay $200 when ready, then $320 a week later, you'll be done in two weeks and pay roughly $35 in total interest instead of $100 or more.

Some people try to "game" cash advances by withdrawing cash, depositing it back into their account, and using it to pay down the balance. This doesn't work—you still owe the fee and the interest, and you've gained nothing.

Frequently Asked Questions

Can I get a cash advance if I have a low credit limit?

Your cash advance limit is separate from your credit limit and is usually lower. Even with a $500 credit limit, your cash advance limit might be $100 or $150. Call your card issuer to ask what your cash advance limit is before you try to withdraw.

Will a cash advance hurt my credit score?

It can. A cash advance increases your credit utilization ratio, which makes up about 30 percent of your credit score. If you're already using a high percentage of your available credit, a cash advance can lower your score. The impact is temporary and improves as you pay down the balance.

What's the difference between a cash advance and a balance transfer?

A balance transfer moves debt from one card to another (or from another type of account to a card). A cash advance withdraws cash against your card's line of credit. Balance transfers sometimes have lower fees and promotional rates; cash advances do not.

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

Technically yes, but it's almost never worth it. You'll pay a cash advance fee plus a higher interest rate, so you're paying more to move money from one card to another. A balance transfer or personal loan is cheaper.

How long does a cash advance stay on my credit card statement?

It stays until you pay it off. Unlike a purchase that might fall off after 30 or 60 days, a cash advance balance remains on your account and continues to accrue interest until the full amount is repaid.