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What Is a Credit Card Cash Advance?

Posted by Prabhjot7 jot7
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On March 31, 2022

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.

Table of contents

  • What is a cash advance?
  • How much do cash advances cost?
  • How much money can I take out through a cash advance?
  • How to get a cash advance from a credit card
  • What to watch out for in the terms and conditions
  • How to pay off a cash advance
  • Cash advance alternatives

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.

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 In addition to the interest charged, you’ll also pay a fee that is a percentage of the amount withdrawn.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.

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 A typical cash advance fee is 3% to 5% of the amount withdrawn and a minimum of $10.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The cash advance APR is the annual percentage rate charged on the money you’ve withdrawn from your card.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.

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