A credit card cash advance lets you withdraw cash against your credit limit, usually with a fee and a higher interest rate that starts right away.
How it works
You withdraw cash at an ATM or bank using your credit card. The amount counts against your cash advance limit, which is usually lower than your credit limit.
Costs
- Fee of 3% to 5% of the amount, or a $10 minimum.
- A higher APR, often 25% or more.
- No grace period: interest starts right away.
Alternatives
Personal loans, paycheck advances or credit union loans.
Tip
Use only for emergencies and repay fast.
Cash advance fees
Most credit cards charge a cash advance fee of 3% to 5% of the amount, often with a minimum of 10 dollars. A 500 dollar advance may cost 25 dollars in fees at 5%.
Interest
Cash advances usually have a higher APR than purchases (often 25% to 30%), start accruing interest immediately without a grace period, and may be paid after other balances, according to the card agreement. Interest is charged from the date of withdrawal.
Limit
The cash advance limit is usually lower than your credit limit, often 20% to 50% of it. Check your statement or contact the issuer.
Example
Withdrawing 1,000 dollars with a 5% fee and 29% APR, and repaying after 30 days, costs about 50 dollars in fees and about 24 dollars interest, which comes to roughly 74 dollars, or about 7.4% in one month.
Credit score
A cash advance does not directly affect the score, but a higher balance raises utilization, which can lower the score.
Types of cash advance
ATM withdrawals with a PIN, over the counter bank withdrawals, convenience checks, money orders and wire transfers, and some uses such as buying lottery tickets, casino chips or crypto may be treated as cash advances.
Alternatives
- Personal loan from a bank or credit union.
- Payday alternative loans (PALs) from credit unions, with APRs capped at 28%.
- Borrowing from family or friends.
- Paycheck advance through an employer.
- Negotiating with creditors.
Pay quickly
Because interest accrues daily, pay off cash advances first if possible and ask the issuer how payments are applied.
Regulator tip
The Consumer Financial Protection Bureau recommends avoiding cash advances except in emergencies.
Costs and terms
A credit card cash advance lets you withdraw cash from an ATM or bank using your card. It usually carries a fee of 3 to 5 percent of the amount, with a minimum of about 10 USD, and interest starts the same day with no grace period. The cash advance APR is often higher than the purchase APR, commonly 25 to 30 percent. For example, a 500 USD advance with a 5 percent fee and 28 percent APR costs 25 USD upfront plus about 11.50 USD in interest for one month. The cash advance limit is typically a fraction of your credit limit.
Effects and alternatives
Cash advances raise your balance and credit utilization, which can lower your credit score, and payments may go first to the lower interest balance. Alternatives include a personal loan from a credit union, a payday alternative loan, borrowing from family, asking for a paycheck advance from an employer, or negotiating with a creditor. Convenience checks and balance transfers from a card issuer may be treated as cash advances. If you take one, repay as fast as possible. Read the terms in the cardholder agreement.
Based on data from the Consumer Financial Protection Bureau
