Yes, you can withdraw cash from a credit card, but it costs more than a purchase and works differently
You can take cash out using your credit card at an ATM, through a bank teller, or sometimes at a store checkout. The transaction is called a cash advance. Unlike a purchase, a cash advance starts charging interest when ready — there is no grace period — and the interest rate is usually higher than your regular purchase rate. You will also pay an upfront fee, typically 3 to 5 percent of the amount you withdraw.
Most people use cash advances only when they have no other option, because the cost adds up quickly. If you need cash regularly, a debit card or a trip to your bank is cheaper. But if you are in a situation where a cash advance makes sense, here is how it works and what to watch for.
Key Takeaways
- A cash advance charges a fee (usually 3 to 5 percent) plus interest that starts accruing when ready, with no grace period like purchases have.
- The interest rate on cash advances is typically 2 to 3 percentage points higher than your regular purchase rate.
- You can withdraw cash at an ATM using your credit card PIN, at a bank teller with your card and ID, or sometimes at a store register.
- Payments toward your credit card balance go to purchases first, then cash advances, so the cash advance interest keeps growing while you pay down purchases.
- The longer you carry a cash advance, the more expensive it becomes, so repay it as quickly as you can.
How to withdraw cash using your credit card
The simplest method is to use an ATM. Insert your credit card, enter your PIN (the same one you use for debit), and select the cash withdrawal option. The ATM will show you the amount available and the fee before you confirm. Withdraw only what you need, because every dollar costs you when ready.
If you do not have a PIN set up, call the number on the back of your credit card and ask the issuer to issue one. This usually takes a few minutes on the phone. Some card issuers let you set a PIN through their mobile app or website instead.
A second option is to visit a bank branch in person. Bring your credit card and a photo ID. Tell the teller you want a cash advance. They will process it at the counter, and you will walk out with cash. This method works even if you do not have a PIN.
A third option, less common but available at some retailers, is to ask a cashier for a cash advance at checkout. You swipe your credit card, and the cashier gives you cash back. Not all stores offer this, and fees may be higher than at an ATM.
What fees and interest rates you will pay
Every cash advance charges two costs: an upfront fee and interest. The upfront fee is typically 3 to 5 percent of the amount you withdraw. On a $300 cash advance, that is $9 to $15 paid when ready. Some card issuers set a minimum fee (for example, $3 or $5) even if the percentage would be less.
Interest starts accruing the same day you withdraw the cash. There is no grace period. The interest rate on cash advances is usually 2 to 3 percentage points higher than your regular purchase rate. If your purchase rate is 18 percent, your cash advance rate might be 21 or 22 percent. Your card's terms will list both rates separately.
The interest compounds daily. On a $300 cash advance at 21 percent annual interest, you pay roughly $1.73 per day in interest alone. After 30 days, you owe about $52 in interest plus the original $300 plus the upfront fee. The longer you carry it, the faster the cost grows.
How payments are applied when you owe both purchases and cash advances
This is where cash advances become expensive for most people. When you make a payment to your credit card, the card issuer applies it to your balances in a specific order set by law. Purchases are paid down first, then cash advances.
This means if you owe $500 in purchases and $300 in a cash advance, and you send in a $200 payment, that $200 goes entirely toward the $500 purchase balance. Your $300 cash advance sits untouched, still accruing interest at the higher rate. You have to pay off all your purchases before any payment touches the cash advance.
The result is that cash advance interest keeps growing while you are paying down other balances. Many people end up paying far more in interest than they expected because they did not realize this rule.
Why a cash advance is expensive compared to other options
A cash advance is one of the most expensive ways to borrow money on a credit card. Compare it to alternatives: a personal loan from a bank typically charges 6 to 36 percent interest with no upfront fee. A payday loan charges a flat fee but is meant to be repaid in two weeks. A balance transfer to a 0 percent card (if you may have access to) costs 3 to 5 percent upfront but charges no interest for 6 to 21 months.
A cash advance makes sense only when you have no other option and need cash urgently. If you have time to plan, a personal loan or a balance transfer is cheaper. If you need cash for everyday spending, a debit card or a withdrawal from your bank account costs nothing.
How to minimize the cost if you must take a cash advance
If you decide a cash advance is necessary, take only what you need. Every dollar withdrawn costs you a fee plus daily interest. A $100 advance is cheaper than a $300 advance, even if you end up needing to take another one later.
Repay it as fast as you can. The longer the cash sits in your account, the more interest you pay. If you can pay it back within a week or two, the total cost is lower than if you carry it for months. Make a separate payment specifically toward the cash advance if your card allows it, so you know the money is going to the higher-interest balance.
Before you take a cash advance, check your card's terms for the exact fee and interest rate. These vary by card issuer and sometimes by the type of card you hold. A call to the number on the back of your card takes two minutes and tells you the exact cost before you commit.
Frequently Asked Questions
What is the difference between a cash advance and a regular purchase?
A purchase has a grace period (usually 21 to 25 days) before interest starts. A cash advance charges interest from day one. Purchases are also paid down first when you make a payment, while cash advances are paid down last. Both use your credit limit, but cash advances are treated as a separate, more expensive type of debt.
Can I use a credit card to withdraw cash from my own bank account?
No. If you want to withdraw from your own bank account, use your debit card or visit a teller. Using your credit card at an ATM is always a cash advance, which means you are borrowing money and paying interest, not accessing your own funds.
Will a cash advance hurt my credit score?
A cash advance itself does not directly hurt your score, but it increases your credit utilization (the percentage of your available credit you are using). High utilization can lower your score temporarily. If you carry the cash advance balance for months, the interest and ongoing balance will also show up on your credit report and may lower your score over time.
What happens if I cannot pay back the cash advance?
The balance stays on your credit card and keeps accruing interest. If you miss payments, late fees are added and your credit score drops. The card issuer can raise your interest rate or close your account. If the debt goes unpaid long enough, it may be sent to a collection agency.
Can I take a cash advance from a credit card I do not use for purchases?
Yes. You can take a cash advance from any credit card you own, regardless of whether you use it for purchases. The same fees and interest rates explore. Some people open a new card specifically for a cash advance, but this is rarely worth it because the upfront cost and interest are the same.