What happens when you withdraw cash using a credit card

Getting cash from a credit card is called a cash advance. Unlike a debit card withdrawal, which pulls money you already have in a bank account, a cash advance borrows money from your credit card issuer. The money appears in your wallet or bank account within minutes to a few hours, but you start paying interest on it when ready — usually at a higher rate than your regular purchase APR.

The process is straightforward: you go to an ATM or bank teller, insert your credit card, enter your PIN, and withdraw cash up to your available credit limit. But the cost structure is different from a purchase. Most card issuers charge an upfront fee (typically 3 to 5 percent of the amount withdrawn), and interest begins accruing the same day — there is no grace period like there is for purchases.

Cash advances should be a last resort for when ready cash needs, not a regular money-moving tool. The fees and interest rates make them expensive compared to other options like ATM withdrawals from a checking account, personal loans, or even credit card balance transfers.

Key Takeaways

  • A cash advance charges an upfront fee (usually 3 to 5 percent) plus a higher interest rate than regular purchases, with interest starting when ready.
  • You can withdraw cash at any ATM that accepts your card, or at a bank teller window, up to your available credit limit.
  • Most credit cards require you to set up a PIN before your first cash advance, which you can do online or by calling the card issuer.
  • The total cost of a cash advance grows quickly because interest compounds daily, so repaying it as soon as possible saves money.
  • Alternatives like personal loans, payday loans, or borrowing from family often cost less than a cash advance, depending on your situation.

Setting up a PIN for your credit card

Before you can withdraw cash at an ATM, your credit card must have a PIN (personal identification number). Many people who use their card only for purchases never set one up. If you have not used your card for cash before, you will need to create a PIN first.

Most card issuers let you set a PIN online through your account portal. Log in, look for a section labeled "Card Services," "Account Settings," or "PIN Management," and follow the prompts to create a four-digit number. If your card issuer does not offer online PIN setup, call the customer service number on the back of your card and ask to set one over the phone. The PIN takes effect within minutes to a few hours.

Write down your PIN and store it somewhere find — not in your wallet or phone. You will need it every time you use an ATM.

Where to withdraw cash and what to expect

You can withdraw cash at any ATM that displays your card network's logo (Visa, Mastercard, American Express, or Discover). ATMs at your card issuer's bank branches usually charge no extra fee, but ATMs at other banks or independent machines typically charge a surcharge on top of the cash advance fee your card issuer charges. A $200 withdrawal might cost you $6 to $10 in fees before you even pay interest.

You can also visit a bank teller window at any branch of your card issuer's bank and ask for a cash advance. The teller will swipe your card, verify your identity, and give you cash. This route avoids ATM surcharges but requires you to visit during business hours.

Most ATMs limit how much you can withdraw in a single transaction — often $500 to $1,000 — and your card issuer may set a separate daily cash advance limit. Check your card's terms or call customer service to find out what your limit is before you go to the ATM.

Understanding the fees and interest you will pay

A cash advance costs money in three ways: the upfront fee, the interest rate, and any ATM surcharge. The upfront fee is usually 3 to 5 percent of the amount withdrawn — so a $500 cash advance costs $15 to $25 before interest. This fee is added to your credit card balance when ready.

The interest rate on cash advances is almost always higher than the rate on purchases. While a purchase APR might be 18 percent, a cash advance APR could be 25 percent or higher. Interest starts accruing the day you withdraw the cash, with no grace period. If you carry the balance for a month, a $500 advance at 25 percent APR costs roughly $10 in interest alone, on top of the $15 to $25 upfront fee.

To see the exact fees and rates for your card, check your cardholder agreement or log into your account and look for the "Pricing and Terms" or "Fees" section. If you cannot find it, call customer service and ask: "What is my cash advance fee and my cash advance APR?"

How to repay a cash advance quickly

Interest on a cash advance compounds daily, so the longer you carry the balance, the more you pay. The best strategy is to repay it as soon as possible — ideally within a few days.

When you make a payment to your credit card, the card issuer applies it first to the highest-interest balance. If you have both purchases (at 18 percent) and a cash advance (at 25 percent), your payment goes to the cash advance first, which is what you want. Make a payment online through your card's website or app, or set up an automatic payment from your bank account.

If you cannot repay the full amount when ready, at least repay the fee and some of the principal. A $500 cash advance with a $20 fee costs $520. If you repay $300 within a week, you have eliminated most of the balance and cut the interest that will accrue on the remainder.

When a cash advance makes sense versus other options

A cash advance is rarely the cheapest way to get cash, but it may be the fastest. If you need cash in the next hour and have no other option, a cash advance from an ATM is quicker than a personal loan or payday loan, which take hours or days to process.

Compare the cost to alternatives. A personal loan from a bank or credit union typically charges 6 to 36 percent APR with no upfront fee, and you have a fixed repayment schedule. A payday loan charges a flat fee (often $15 to $20 per $100 borrowed) but is meant for very short-term borrowing — usually two weeks. A cash advance on a credit card charges both a fee and a high APR, making it expensive if you carry the balance beyond a few days.

If you have a friend or family member who can lend you the money interest-free, that is almost always cheaper than any of these options. If you have a second credit card with a lower cash advance APR, that card might be slightly cheaper. But if you have time to explore options, a personal loan or line of credit from your bank usually costs less than a cash advance.

What to do if you cannot repay the cash advance

If you cannot repay the cash advance within a few weeks, the interest will grow faster than you can pay it down. At that point, you have a few options.

The first is to transfer the balance to a different credit card that offers a 0 percent introductory APR on balance transfers. This gives you a window (usually 6 to 21 months) to repay the balance without interest accruing. You will pay a balance transfer fee (typically 3 to 5 percent), but if you can repay within the promotional period, you save money on interest. This only works if you have access to another card and have not maxed out your credit limit.

The second is to take out a personal loan to repay the cash advance. If you can borrow at 12 to 18 percent APR instead of 25 percent, you save money on interest going forward. The loan has a fixed repayment schedule, which makes budgeting easier than a credit card balance.

The third is to contact your card issuer and ask about a hardship program. Some issuers offer reduced interest rates or payment plans if you explain that you are struggling. This does not erase the debt, but it may lower the rate while you repay.

Frequently Asked Questions

Can I use a credit card to withdraw cash at a grocery store or gas station?

No. Cashback at a point-of-sale terminal (when you buy something and ask for cash back) is not a cash advance — it is a regular purchase that happens to include cash. A cash advance must be withdrawn at an ATM or bank teller window. The two are treated differently for fees and interest.

What if I forget my PIN?

Call the customer service number on the back of your card and ask to reset your PIN. The issuer will verify your identity and send you a new PIN by mail or set a temporary one over the phone. This usually takes a few days, so plan ahead if you need cash soon.

Does a cash advance hurt my credit score?

A cash advance itself does not directly hurt your score, but carrying a high balance does. If the cash advance pushes your credit utilization (the percentage of your available credit you are using) above 30 percent, your score may drop. Repaying the balance quickly keeps utilization low and minimizes damage.

Can I withdraw more cash than my credit limit?

No. Your cash advance is limited by your available credit — the difference between your credit limit and your current balance. If your limit is $5,000 and you have a $3,000 balance, you can advance up to $2,000. Your card issuer may also set a separate cash advance limit that is lower than your overall credit limit.

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

Yes. A cash advance withdraws cash from your credit line and charges a high APR when ready. A balance transfer moves debt from one card to another and often includes a promotional 0 percent APR period. Balance transfers are for moving existing debt; cash advances are for getting cash in hand.