What is a Credit Card Cash Advance?

A cash advance is the process of using one’s credit card to obtain money immediately. We do not recommend this - we think cash advances are a bad deal to consumers. It should be a last-ditch effort only if you need money and have exhausted other options (such as withdrawing money directly from a savings account). By taking out a cash advance, individuals are subjected to high fees and high interest rates. Cash advances also start collecting interest the second you get them, quickly subtracting away any short-term gains. We’ve constructed this guide to help you understand everything there is to know about cash advances, and what to expect if you decide to take one out. We will do so by exploring:

  • The mechanics of a cash advance – In most cases, performing a cash advance is fairly straightforward with upfront and hidden fees. Understanding these features can help consumers minimize the cost of a cash advance
  • Things to be Careful of with Cash Advances – Paying down a balance from a cash advance is not a straightforward process, and something that is not well explained by the terms and conditions of most credit cards
  • Credit Card Cash Advances in the United States – a look at what one can expect when taking out a cash advance with any one of the major credit issuers in the United States. In particular, US Bank and Bank of America operate differently than most other institutions, having more complex rules about cash advances that can end up saving a consumer money

How does a Credit Card Cash Advance Work?

Cash advances are generally performed at an ATM, with a bank teller, or through the use of a convenience check. To take out money at an ATM using your credit card, you need to have a PIN set up with your card issuer. If you didn’t set a PIN when opening your account, call your credit card company’s customer service phone number. You may then withdraw money from any ATM, like you would with a debit card.

Here are the customer services phone numbers to some of the major credit issuers in the United States. You can call these numbers to request a PIN to be assigned to your credit card.

Issuer Customer Service Phone Number
American Express 1-800-801-6564
Bank of America 1-800-732-9194
Barclaycard 1-302-255-8990
Capital One 1-800-227-4825
Chase 1-800-935-9935
Citi 1-800-950-5114
Discover 1-800-347-2683
Fidelity 1-866-598-4971
US Bank 1-800-285-8585
Wells Fargo 1-800-642-4720

Some credit cards allow you to perform a cash advance by speaking directly with your card’s bank teller. Certain card issuers, such as US Bank, will charge you less money for the transaction, when using this method. We explain more about this in the third section of this article.

Finally, the third most common way of receiving a cash advance is by using a convenience check. You may be familiar with these checks, as credit card companies frequently mail them to cardholders (often with special offers attached). These checks can be used in the same way as ordinary checks, which are linked to a checking account. When these convenience checks come with an attached offer – such as 0% APR for a certain period of time – they can be worth considering. Otherwise, we advise consumers to stay away from them.

How much money can I take out through a cash advance? The answer to this will depend on your bank and your FICO credit score. The higher a consumer’s FICO score, the more of your credit limit he or she can use for a cash advance. You will never be able to take out a cash advance for an amount greater than your credit limit less the cash advance fee. Most banks will go a step forward and set a separate cash credit limit, which is just a small percentage of your total credit limit. 

What is the cost of a cash advance? If you decide to take out a cash advance, you will have to pay an upfront fee and a separate APR. The upfront fee is on average $9 or 4% - whichever is greater. With the average credit card, the cost for cash advances up to $225 will be $9. For any larger withdrawal, you will pay 4%. The sum of the cash advance plus the fee will be the total cash advance balance on your account. This is an important distinction since it impacts the second cost, your cash advance APR. Your cash advance balance is separate from the balance that results from your purchases. The cash advance balance accumulates higher interest and begins gathering interest the moment you get the cash. There is no grace period.

In examining the credit cards in our database, we found the average APR on a cash advance to be around 24% - significantly higher than the purchase APR which averages between 13.02% and 15.77%. To get an idea of how much a 24% APR will cost you, we calculated the interest on a $1,500 cash advance that was taken out on the 1st day of the billing cycle. The upfront fee of the cash advance would be $1,500 x 4% = $60. For the first month, the interest would be 1.98%, or $31. Extending that over 6 months gets us: 

Month 1 2 3 4 5 6 Total
Interest $31 $31 $32 $33 $33 $34 $194

By the end of the 6-month period, this type of cash advance would set you back 17%. You received $1,500, which ended up costing you $60 in fees upfront and $194 in interest after six months for a total of $254 in costs. These expenses are why we recommend most people stay away from cash advances, if possible. They're quite costly if one is unable to quickly pay the balance off.

Things to be Careful of with Cash Advances

How funds are applied: When you make a minimum payment on your credit card balance, the funds are applied to your purchases first before the cash advance balance. This is because most banks automatically direct minimum payments towards items collecting lower interest. Unfortunately, most banks will not allow you to target items on your balance when you make your payments. You will be unable to request that funds pay down your more expensive cash advances before your purchase balance. However, all payments in excess of the minimum are mandated by law to be applied towards the highest APR balance. Therefore, we advise that at any point that you take out a cash advance, your next payment should be the minimum + the cash advance amount. Better yet, pay the whole balance off completely, if possible.

Special types of purchases: Another thing to be aware of is that banks may consider certain purchases as cash advances even if you don't withdraw money at an ATM or use the convenience check. Anytime you make one of the purchases below, bear in mind that they could be treated as cash advances:

  • Lottery tickets
  • Casino gambling chips
  • Traveler’s checks/money orders
  • Foreign currency
  • Cash equivalent purchases on PayPal

Funding a PayPal account may, in certain cases, be flagged as a cash advance. This applies mostly to instances where you pay for a transaction using PayPal, and the merchant categorized the product they were selling as a ‘cash equivalent” (such as certain gift cards).

Where to find Terms & Conditions: Finally, we'd like to note that it is impossible for us to summarize all the terms and conditions for the thousands of credit cards available in the United States. However, after reading our guide, you should be able to just open up any agreement page and understand their sections about cash advances. Banks frequently update their terms of service, so we recommend you look them over before taking out a cash advance. In the image below, we show exactly where on the terms of service you should look in order to find information about cash advances. Luckily, these agreements are standardized in the U.S., so you should more or less see the same format across different credit cards.

This image shows where cash advance terms usually appear on a typical credit card agreement

Credit Card Cash Advances in the United States

How do terms & conditions for cash advances differ by credit card company? The table below shows the ballpark APR, minimum amounts, and minimum fees for cash advances by the major credit card issuers in the U.S. US Bank, Bank of America, and Chase are slightly more complicated (more after the table).

Institution Average Cash Advance APR Average Minimum $ Average Minimum %
American Express 25% $5 3%
Bank of America 21% $10 5%
Barclaycard 25% $10 5%
Capital One 24% $10 3%
Chase 21% $10 4%
Citi 25% $10 5%
Discover 25% $10 5%
US Bank 24% $7 4%
Overall 24% $9 4%

US Bank will charge different fees for your cash advance, depending on the method you choose. Convenience check cash advances are the cheapest to carry out, costing just 3% of the amount of each advance, or a $5 minimum. If you purchase a cash equivalent (e.g. casino chips) you will pay the highest fees at 4% of the cash advance amount, or $20 – whichever is greater. A full list of fees for different cash advances with US Bank can be seen in the table below:

Cash Advance Type (With US Bank) Associated Fee
Convenience Check Cash Advance Either 3% of the amount of each advance or $5 minimum, whichever is greater.
Cash Advance ATM Either 4% of the amount of each advance or $10 minimum, whichever is greater.
Cash Advance Either 4% of the amount of each advance or $10 minimum, whichever is greater.
Cash Equivalent Advance Either 4% of the amount of each advance or $20 minimum, whichever is greater.

Cash advances with Bank of America are a little simpler; there are only two fee categories. If you take out a cash advance via direct deposit or a check you will pay 3% of that amount, or a $10 minimum. For all other cash advances, including ATMs, and cash equivalent purchases, consumers will have to pay 5%, with a minimum payment of $10.  Regardless of whether you are a Bank of America customer, or some other issuer's cardholder, we recommend staying on top of your card's terms and conditions. As you can see from the conditions listed above, you can end up saving yourself a lot of money by going about a cash advance in different ways.

When it comes to differences between cards of the same bank, Bank of America and Chase have the biggest internal variance. If you are shopping for a credit card with one of those banks, and cash advances matter to you, we recommend you keep an eye on their differences. Other issuers mostly offer the same interest rates on all the cards they provide. US Bank is the only exception. Its' cash advance APR varies mostly between secured vs non-secured credit cards – with the latter being the less expensive.

Cash Advances from the Bank’s Perspective

Banks put such high fees and interest on cash advances because they take on a high risk when giving them out. The person receiving the credit may, after all, be unable to pay back the loan. When you don't pay your issuer back for a brand new computer you bought on their credit card, the bank theoretically has the ability to repossess the item and get some of the value back. This is not possible with a cash advance, as it is impossible to take back the money they gave you. Therefore, by giving out a cash advance, a bank stands more to lose and increases the risk it takes on. The result of this increased risk is the increased fees and interest which we discussed above.

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