What Is a Credit Card Cash Advance?

What Is a Credit Card Cash Advance?

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When you need money fast but are unsure of where to turn, you may be considering a credit card cash advance. Although these short-term loans can come with fees and a high interest rate, they are typically easily accessible and can provide money quickly. Unlike credit card purchases, cash advances do not offer a grace period and start charging interest immediately.

Because of how expensive they are, cash advances are typically a bad deal for consumers and should only be used once you've exhausted all of your other options. We’ve created 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.

What is a cash advance?

A cash advance is when you use your credit card to withdraw cash or purchase cash-equivalent items. You can withdraw cash from your credit card at the ATM, in a branch or through convenience checks. Cash equivalent items include lottery tickets, casino gaming chips, money orders and other similar purchases.

How much do cash advances cost?

When you perform a cash advance from a credit card, the costs vary from bank to bank. In addition to the interest charged, you'll also pay a fee that is a percentage of the amount withdrawn. Those fees have a minimum charge of around $10, so even a small cash advance is costly.

Typical cost of a cash advance by bank

Institution
Typical cash advance APR
Typical minimum $
Typical minimum %
American Express25.24%$105%
Bank of America16.99%-28.99%$105%
Barclaycard25.24%$103%
Capital One24.49%-26.99%$103%
Chase24.99%$105%
Citi25.24%$105%
Discover24.99%$105%
U.S. Bank25.99%$105%

Here are some items you should take into consideration when trying to determine how much a cash advance will cost you:

Cash advance fee

When you request a cash advance from your credit card, the bank charges a fee based on the amount of cash you withdraw. The fee is a percentage of the withdrawal, with a minimum fee amount, even for small transactions. A typical cash advance fee is 3% to 5% of the amount withdrawn and a minimum of $10. For a $300 cash advance, the typical fee would be $15.

Cash advance APR

The cash advance APR is the annual percentage rate charged on the money you've withdrawn from your card. This rate is usually higher than the standard interest rate charged on purchases. Based on our research of major banks in the U.S., the typical cash advance APR ranges from 17% to 29%.

ATM or bank fees

In addition to fees charged by your bank, if you withdraw from another bank's ATM, it may also charge you fees. Banks usually charge non-customers fees for accessing cash through their ATMs, which makes an expensive transaction even more costly.

How is interest calculated on a cash advance?

When you take out a cash advance, interest begins accumulating immediately because there is no grace period on these transactions. Interest is charged not only on the amount of the cash advance but also on the fees related to the cash advance.

An analysis of the credit cards in our database found the average APR on a cash advance is around 25%. This is significantly higher than the minimum purchase APR which averages between 12.85% and 15.99%. To get an idea of how much a 25% APR will cost, we calculated the interest on a $1,500 cash advance that was taken out on the first day of the billing cycle. The upfront fee of the cash advance is $75 ($1,500 x 5%), which increases the balance to $1,575.

For the first month, the interest owed on the cash advance is $33. When that interest is added to the balance, the amount of interest charged continues to increase over time. Extending that over six months gets us:

Month
1
2
3
4
5
6
Total
Interest$33$33$34$35$36$36$207
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How much money can I take out through a cash advance?

The answer depends on your bank and your FICO credit score. With a higher FICO Score, banks tend to make more of your credit limit available 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 take it a step further and set a separate cash credit limit, which can be just a fraction of your overall credit limit.

How to get a cash advance from a credit card

If you've decided that a cash advance is the right move for you, there are three primary methods to obtain cash from your credit card. The three methods are ATM withdrawal, from a bank teller or by a cash advance check from your card issuer:

By ATM

To withdraw money using your credit card at an ATM, 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 Express1-800-528-4800
Bank of America1-800-732-9194
Barclaycard1-866-928-8598
Capital One1-800-227-4825
Chase1-800-432-3117
Citi1-800-950-5114
Discover1-800-347-2683
U.S. Bank1-800-285-8585
Wells Fargo1-800-642-4720

Through a bank teller

Some credit cards allow cash advances by walking into a branch and speaking with a teller. Typically, you must visit a branch from the same bank that issues your card.

Certain card issuers, such as U.S. Bank, charge less money for a cash advance when using this method. By being in person, the bank can verify your identity before processing the transaction, which reduces the risk of fraud and results in lower fees.

By check

Credit card companies frequently mail convenience checks to cardholders. These checks can be used like ordinary checks linked to a checking account. People often use convenience checks to pay a bill, deposit into a bank account or transfer a balance.

Some convenience checks include a promotional offer — such as 0% APR for a certain period of time — that can save money versus a traditional cash advance. If you haven't received these offers, call your bank to ask if you qualify for any promotions.

What to watch out for in the terms and conditions

Before performing a credit card cash advance, it is helpful to read the terms and conditions of your card to understand the interest rates, fees and other important factors that apply. While you should have received a booklet with the card's terms and conditions when it first arrived, like most of us, you probably didn't read it thoroughly. Even if you did, the terms and conditions are most likely outdated by now.

To find the latest terms and conditions applicable to your card, you can call the bank's customer service or you can look online. Visit the bank's website and look for your credit card's page. On your card's page, look for a link that says "Review rates and fees," "Pricing & Terms" or something similar.

Bank of America Premium Rewards Credit Card rates and fees link

Clicking on these links will open the latest rates, fees and other terms for your card. The cash advance APR is under the interest rates section, while the fees charged are listed with the other fees. Luckily, these agreements are standardized in the U.S., so you should more or less see the same format across different credit cards.

Bank of America Premium Rewards Credit Card rates and fees

Fees and APR

Many banks do not have a one-size-fits-all approach to cash advances. The type of cash advance you use may affect the APR and fees that you'll pay. Banks view cash advances as a risky transaction because you are receiving cash instead of a product or service, so the APR is often higher than purchases or balance transfers. Additionally, some types of cash advances are riskier than others, so the bank charges an even higher APR and fees for them.

Sample cash advance fees

Cash advance type (with U.S. Bank)
Associated fee
Convenience check cash advanceEither 3% of the amount of each advance or $5 minimum, whichever is greater.
Cash advance ATMEither 5% of the amount of each advance or $10 minimum, whichever is greater.
Cash advanceEither 5% of the amount of each advance or $10 minimum, whichever is greater.
Cash equivalent advanceEither 5% of the amount of each advance or $20 minimum, whichever is greater.

Grace period

Unlike a purchase transaction, when you perform a cash advance from a credit card, there is no grace period. Interest starts accruing immediately, even if your previous month's credit card balance was paid in full. If you pay the cash advance in full upon receiving your statement, you'll still be charged interest for that handful of days.

How funds are applied

When you make a minimum payment on your credit card balance, the funds are applied to purchases first before the cash advance balance.

This is because most banks automatically direct minimum payments towards items collecting lower interest. Unfortunately, most banks do not allow customers to target specific transactions when payments are made. This means that you cannot request that funds pay down more expensive cash advances before your purchase balance.

However, all payments in excess of the minimum due are mandated by law to be applied towards the highest APR balance. Therefore, if you've taken out a cash advance, your next payment should be the minimum due plus a portion of the cash advance amount. If possible, paying the entire balance completely minimizes the interest owed to the bank.

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 a convenience check. When you make one of the purchases below, the transaction could be treated as a cash advance:

  • 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).

How to pay off a cash advance from a credit card

If you've taken out a cash advance from a credit card, here are some quick tips on paying down your balance to minimize the interest owed:

  • Make extra payments. Instead of waiting until your statement arrives, make extra payments throughout the month to reduce your average daily balance. Every reduction in the balance owed will reduce the amount of interest that you'll pay.
  • Transfer balance to a 0% APR. Consider applying for a new credit card with a 0% APR balance transfer offer. This will eliminate the monthly interest charges and allow all of your payments to reduce your balance.
  • Pay it off with a personal loan. Apply for a personal loan that will pay off your cash advance. With a fixed payment amount and defined term, you'll have a clear path to paying off your cash advance.

Cash advance alternatives

Because cash advances can carry high interest rates and fees, it pays to evaluate alternatives that may be less expensive. Here are a few options that you may want to consider:

  • A personal loan. Getting approved may take longer, but personal loans tend to offer lower rates with a fixed payment. This method provides a path to pay off the balance within a specific timeframe.
  • Credit card promotional offers. Banks regularly send out checks offering 0% APR promotions. These checks can be used to transfer a balance, pay expenses or deposit into your bank account.
  • Borrow from family or friends. Personal relationships can be affected when you borrow money, especially if you're unable to repay the loan in a timely manner.
  • Overdrawing your checking account. If your bank account is linked to a line of credit or credit card for overdraft protection, you can write a check or use a debit card to overdraw your account to make the payment or get the cash that you need.
  • Sell personal belongings. Online marketplaces like Facebook, OfferUp and Craigslist make it simple to sell unused items. The money earned from items around your house could reduce or eliminate the need to make a cash advance.
  • 401(k) loan. Most experts advise against borrowing from your retirement account because it can dramatically affect your financial future. However, with cash advance rates and fees so high, one of these loans may be a better option in a true emergency situation.

What is a cash advance APR?

The cash advance APR is the interest rate that is charged when you take out a credit card cash advance. This rate is typically higher than the standard APR for purchases or balance transfers. Some banks charge a different cash advance APR based on the way that you access cash from your credit card.

What is the cash advance fee?

In addition to the interest rate that is charged on your cash advance, most banks also charge a fee for these transactions. The cash advance fee is a percentage of the transaction amount, with a minimum charge. The typical minimum charge is $10, but it can go higher depending on the bank and the method used to access the cash advance.

What is the cash advance credit line?

While your credit card has one limit for all of your transactions, the amount of your credit limit that you may use for a cash advance is usually much lower. The cash advance credit line is the maximum amount that you may withdraw, inclusive of fees, from your credit card.

Where can I get a credit card cash advance?

The common methods to get a credit card cash advance are convenience checks, ATMs or from a bank teller. Additionally, the purchase of certain cash-equivalent products, like lottery tickets or money orders, may also be coded as a cash advance.

Do cash advances hurt your credit score?

A cash advance by itself does not hurt your credit score because card issuers do not report that information to the credit bureaus. However, when you perform a cash advance, your balance increases, which causes your utilization (amount of credit being used) to rise. A high utilization ratio can cause your credit score to drop.

Can you get a cash advance from an ATM?

Yes, most credit cards allow cash advances from an ATM if you have an access pin. Some card issuers mail this pin once your account is approved, while other banks require you to create or request one online, through telephone customer service or in a branch.

How long do you have to pay back credit card cash advances?

Cash advances do not have a grace period like a purchase or a promotional period like a balance transfer. Your interest begins accruing immediately, so the sooner that you can pay off the cash advance, the less interest that you will be charged.

Do you get points for cash advances?

No, cash advances are excluded from receiving the points, miles or cash back you normally receive for making purchases with your credit card.

Does my card’s 0% APR apply to cash advances?

No, 0% APR promotions offered by your bank apply to purchases, balance transfers, or both, depending upon the offer. Cash advances are typically excluded from these promotions and are charged the cash advance APR.

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