A cash advance is a short-term loan against your credit card's available balance
When you take a cash advance, you're borrowing money directly from your credit card issuer and receiving it as cash—usually through an ATM, bank teller, or convenience check. The money hits your account when ready, but the cost is steep. Cash advances carry their own interest rate (often higher than your purchase rate), start accruing interest the same day you withdraw the money with no grace period, and typically include an upfront fee of 3 to 5 percent of the amount withdrawn.
The appeal is speed and accessibility. You don't need a separate loan process or approval process. If your card has available credit, you can walk to an ATM and pull cash within minutes. But that convenience comes at a price that makes cash advances one of the most expensive ways to borrow money on a credit card.
Key Takeaways
- Cash advances charge a separate, usually higher interest rate than purchases, with no grace period—interest starts the day you withdraw the money.
- An upfront fee of 3 to 5 percent of the amount withdrawn is added to your balance when ready.
- The total cost of a cash advance can exceed 30 percent annually when you combine the fee and interest rate.
- Payments toward a cash advance are typically applied last, after purchases, so the debt can linger even if you pay your bill on time.
How to take a cash advance from your credit card
You have three main ways to access a cash advance. The most common is using your card at an ATM—insert your card, enter your PIN (which you may need to set up first with your issuer), and withdraw cash up to your daily limit. Some cards allow you to request cash back at a store checkout, though this is less common. A third option is writing a convenience check provided by your issuer and depositing it into your bank account.
Before you withdraw, check your card's cash advance limit, which is often lower than your overall credit limit. Your issuer sets this separately and may cap it at 20 to 30 percent of your total available credit. You can call the number on the back of your card or log into your online account to find this number.
The fees and interest rates you'll pay
A cash advance fee is charged upfront and added to your balance when ready. This fee is typically 3 to 5 percent of the amount withdrawn, with a minimum of $5 to $10. If you withdraw $500, you might pay a $15 to $25 fee right away. This fee is separate from interest and cannot be waived.
The interest rate on cash advances is also separate from your purchase rate. While a purchase APR might be 18 percent, a cash advance APR could be 25 to 30 percent or higher. Unlike purchases, there is no grace period—interest begins accruing the day you withdraw the money, even if you pay your full statement balance by the due date.
The math adds up quickly. A $500 cash advance at a 5 percent fee ($25) plus 28 percent APR costs you $25 upfront and roughly $11.67 in interest for the first month if you don't pay it back. Over a year, if you only made minimum payments, the total cost would be substantially more than the original $500.
How cash advances affect your credit and payment priority
A cash advance does not directly hurt your credit score in the moment you take it, but it does increase your credit utilization—the percentage of your available credit you're using. If your card has a $5,000 limit and you take a $1,000 cash advance, your utilization jumps to 20 percent. High utilization can lower your score temporarily, and the effect is worse if you're already carrying a high balance.
When you make a payment toward your card, the issuer applies it to your balances in a specific order set by law. Payments go first to the lowest-interest debt (usually purchases), then to higher-interest debt (usually cash advances). This means if you have both a purchase balance and a cash advance balance, your payment reduces the purchase balance first. Your cash advance sits there accruing interest at the higher rate while you're paying down the cheaper debt. This can trap you in a cycle where the cash advance takes months to pay off even if you're making regular payments.
When a cash advance might make sense
Cash advances are rarely the best borrowing option, but there are narrow situations where they might be the fastest way to cover an when ready need. If you need cash for an emergency and have no other way to access it—no savings, no personal loan, no family to borrow from—a cash advance is faster than a payday loan or title loan, both of which often charge even higher rates.
A cash advance also makes sense if you're only borrowing a small amount for a very short time. If you need $100 for a day or two and can pay it back before interest accrues significantly, the fee might be your only real cost. But if you're borrowing $500 or more and can't pay it back within a week or two, the interest and fee will quickly outweigh any convenience.
In almost all other cases, a personal loan, a 0 percent balance transfer card, or a line of credit from your bank will cost you less money. Even a credit card purchase at your regular APR is cheaper than a cash advance if you can't pay it off when ready.
Alternatives to a cash advance
If you need cash, explore these options first. A personal loan from a bank or credit union typically charges 6 to 36 percent APR depending on your credit, has no upfront fee, and gives you a fixed repayment schedule. A balance transfer card offers 0 percent APR for 6 to 21 months on transferred balances, though it includes a 3 to 5 percent transfer fee—still cheaper than a cash advance if you can pay within the promotional period.
A line of credit from your bank, if you have an existing relationship, often charges less than a cash advance and doesn't require a separate process. A payday loan is more expensive than a cash advance (often 400 percent APR or higher) and should be avoided. A cash advance from a friend or family member, if possible, costs nothing and removes the interest and fee entirely.
If you're in a true emergency and have no other option, a cash advance is faster than most alternatives. But it should be a last resort, not a habit.
How to pay off a cash advance quickly
Once you've taken a cash advance, your goal is to pay it off as fast as possible to minimize interest. Make a payment as soon as you can—even before your statement due date if your issuer allows it. Each day the balance sits, interest accrues at that higher rate.
If you have other card balances, prioritize the cash advance in your payments even though the system applies your payment to purchases first. Pay your minimum on purchases, then put any extra money toward the cash advance. Some issuers allow you to make a payment directly to the cash advance balance, bypassing the normal payment order.
If you can't pay the full amount back quickly, contact your issuer and ask about a balance transfer to a 0 percent promotional card, or ask if they offer a hardship program that might lower your rate temporarily. Many issuers have options for customers in financial difficulty, though you have to ask.
Frequently Asked Questions
Can I use a credit card cash advance to pay another credit card?
Technically yes, but it's a costly move. You'd pay the cash advance fee and interest rate on money you're using to pay another card's balance. A balance transfer—moving the balance directly from one card to another—is cheaper because it only charges a transfer fee, not a cash advance fee, and often comes with a promotional 0 percent rate.
Does a cash advance show up on my credit report?
The cash advance itself doesn't appear as a separate line item, but the balance does. It increases your overall credit utilization and appears as a balance on your card. If you miss payments, that shows up on your report and damages your credit score.
What's the difference between a cash advance and a balance transfer?
A cash advance gives you physical cash and charges a cash advance fee plus a higher interest rate. A balance transfer moves debt from one card to another and charges a transfer fee (usually 3 to 5 percent) plus the new card's APR, which is often 0 percent for a promotional period. Balance transfers are cheaper if you're moving existing debt.
Can I get a cash advance if I have a low credit limit?
Your cash advance limit is set separately from your overall credit limit and is usually lower—often 20 to 30 percent of your total limit. If your overall limit is $1,000, your cash advance limit might be $200 to $300. You can call your issuer to ask what your cash advance limit is.
What happens if I only make the minimum payment on a cash advance?
The balance will take a long time to pay off because most of your minimum payment goes toward interest, not principal. A $500 cash advance at 28 percent APR with a $25 fee could take 18 to 24 months to pay off if you only make minimum payments, and you'd pay $200 or more in interest alone.