What happens when you withdraw cash from a credit card
When you withdraw cash from a credit card, you are borrowing money against your credit limit, just as you do when you make a purchase. The key difference is that a cash withdrawal starts charging interest when ready — there is no grace period like you get with regular purchases. Most credit card companies charge a cash advance fee, usually 3 to 5 percent of the amount you withdraw, added to your balance right away.
The interest rate on cash advances is typically higher than the rate on regular purchases. This rate varies by card and by issuer, but it is common to see rates 5 to 10 percentage points higher than your standard purchase APR. Because interest accrues from day one, a $200 cash advance can cost you $10 to $15 in fees alone, plus interest that starts accumulating when ready.
You should treat a credit card cash withdrawal as a last resort, not a convenient way to get cash. The cost adds up quickly, and the debt becomes harder to pay down because interest is working against you from the moment you withdraw the money.
Key Takeaways
- Cash advances charge a fee (usually 3 to 5 percent) and a higher interest rate than regular purchases, with interest starting when ready.
- You can withdraw cash at an ATM using your credit card PIN, at a bank teller window, or through a cash advance check from your card issuer.
- Your credit card company sets a separate cash advance limit, which may be lower than your total credit limit.
- Paying off a cash advance should be your priority because the interest rate is high and there is no grace period.
Withdrawing cash at an ATM with your credit card
The most common way to get cash from a credit card is at an ATM. First, you need a PIN (personal identification number) for your credit card. If you do not have one, call the customer service number on the back of your card and request a PIN. The issuer will mail it to you or give it to you over the phone, depending on the company.
Once you have your PIN, go to any ATM that displays your card's logo (Visa, Mastercard, American Express, or Discover). Insert your card, enter your PIN, select "Withdrawal" or "Cash Advance," and choose the amount. The ATM will dispense the cash and return your card. The transaction appears on your statement as a cash advance, not a purchase.
Be aware that using an ATM outside your card issuer's network may trigger an additional ATM operator fee on top of the cash advance fee your credit card company charges. This fee typically ranges from $2 to $5 per transaction.
Getting a cash advance from a bank teller or check
You can also walk into a bank branch and ask a teller for a cash advance using your credit card. Bring your card and a photo ID. The teller will process the transaction and hand you cash on the spot. This method works the same way as an ATM withdrawal — you pay the cash advance fee and interest begins when ready.
Some credit card issuers send convenience checks with your account. These checks draw directly from your credit line and are treated as cash advances. If you receive them, the envelope will clearly state that using them triggers a cash advance fee and higher interest rate. Do not treat them as regular checks; they carry the same cost as an ATM withdrawal.
Understanding your cash advance limit
Your credit card company sets a separate cash advance limit, which is often lower than your total credit limit. For example, you might have a $5,000 credit limit but only a $1,500 cash advance limit. You cannot withdraw more than this limit, even if you have unused credit available for purchases.
You can find your cash advance limit by logging into your online account, calling customer service, or checking your most recent statement. If you need to know before you go to the ATM, a quick call to the number on the back of your card takes two minutes and saves you a failed transaction.
Paying back a cash advance quickly
Because cash advances charge interest from day one with no grace period, your payment strategy matters. When you make a payment to your credit card, the issuer applies it to your lowest-interest debt first — usually regular purchases — and your cash advance sits there accruing interest at the higher rate.
To pay down a cash advance faster, contact your card issuer and ask how to make a payment that goes directly toward the cash advance balance. Some issuers allow you to specify this when you pay online or by phone. If you cannot direct the payment, you may need to pay off all your regular purchases first before the cash advance balance decreases.
The longer a cash advance sits on your card, the more interest you pay. If you withdrew $200 at a 25 percent APR with a $10 fee, you are paying roughly $4.17 per month in interest alone. Paying it back within a week or two is far cheaper than letting it sit for months.
Why a cash advance is expensive compared to alternatives
Before you use a credit card cash advance, consider whether another option costs less. A personal loan from a bank or credit union typically charges 6 to 36 percent APR with no upfront fee, which is often cheaper than a credit card cash advance when you factor in both the fee and the higher interest rate. Borrowing from a friend or family member, if possible, costs nothing.
Even a payday loan, which is expensive, may cost less than a credit card cash advance if you repay it within two weeks. A payday loan typically charges $15 to $20 per $100 borrowed, which equals 390 to 520 percent APR — but only if you carry it for a full year. A credit card cash advance at 25 percent APR with a 5 percent fee is cheaper if you keep the cash advance for more than a few months.
The point is straightforward: a credit card cash advance should be your last resort, not your first choice. Explore other borrowing options before you use one.
Frequently Asked Questions
Does withdrawing cash from a credit card hurt my credit score?
A cash advance itself does not hurt your score, but it does increase your credit utilization — the percentage of your available credit you are using. If you withdraw $500 from a $5,000 limit, your utilization jumps to 10 percent. High utilization can lower your score slightly. The bigger damage comes from carrying the balance and paying interest, which signals financial stress to lenders.
Can I withdraw cash from a credit card with no PIN?
No. You need a PIN to use an ATM. However, you can go to a bank teller and request a cash advance without a PIN — you just need your card and photo ID. The teller can process it for you on the spot.
What is the difference between a cash advance and a balance transfer?
A cash advance gives you physical cash and charges a fee plus a high interest rate. A balance transfer moves debt from one card to another and may offer a lower introductory rate. Balance transfers are for moving existing debt; cash advances are for getting cash. Both charge fees and should be used sparingly.
Will my credit card company let me withdraw my entire credit limit as cash?
No. Your cash advance limit is separate and usually much lower than your total credit limit. You can only withdraw up to that cash advance limit. If you need more cash, you would have to make a purchase instead, which does not charge a cash advance fee but also does not give you physical money.
How long does a cash advance stay on my credit card?
A cash advance stays on your card until you pay it off. Unlike a purchase, there is no grace period, so interest starts accruing when ready. You can pay it off at any time, and the sooner you do, the less interest you pay.