What is a cash advance on a credit card?

A cash advance on a credit card is when a cardholder uses their card to withdraw cash against the card’s credit line. While it can offer flexibility, a cash advance generally comes with additional fees and higher interest rates than typical credit card purchases.

Find out more about getting a cash advance on a credit card, how much it may cost and possible alternatives.

What you’ll learn:

• Credit card cash advances allow cardholders to borrow money against their credit lines.

• Cash advances may come with fees and have higher interest rates than typical credit card purchases. 

• Some credit card transactions beyond cash withdrawals could be classified as cash advances.

• Alternatives to getting a cash advance may include using an emergency fund or applying for a personal loan.

With a credit card cash advance, you’re borrowing cash against your card’s line of credit. This is different from a cash withdrawal with a debit card connected to a bank account because a cash advance is a type of short-term loan.

You can pay down, or pay off, cash advances in the same way you make any other credit card payment.

Depending on the credit card issuer, you may be able to get a cash advance at a bank branch, through an ATM or with a convenience check you write to yourself.

Even if you never actually hold the cash, there are other credit card transactions that issuers might classify as cash advances. They could include using a credit card to:

• Transfer money by wire or through peer-to-peer apps like PayPal® and Venmo

• Pay monthly bills

• Make payments on other debt, such as auto loans

• Purchase money orders

• Exchange dollars for foreign currency

• Buy lottery tickets

• Buy gaming chips or make other wagers

Credit card cash advances typically involve fees and a higher annual percentage rate (APR). And interest typically starts accruing immediately, with no grace period.

Here are some potential costs associated with cash advances: 

• Cash advance fee: Typically ranges from 3% to 5% of the amount of money you’re taking out or a flat amount, whichever is greater. It could be deducted from the cash advance when you receive it. Or it might be added to your balance. 

• Cash advance APR: The interest rate on a cash advance is also typically higher compared to that on standard purchases.

• Transaction fees: If you use your card to get a cash advance at an ATM that’s out of network, you could be charged a fee. There could still be transaction fees if you visit a branch.

Cash advances might be beneficial because they offer quick access to cash that doesn’t require a credit check. But because of their high cost, the Consumer Financial Protection Bureau says to avoid them. 

If you’re going to use your credit card to access cash, you may want to first consider:

• Additional costs: Cash advances can be an expensive way to access cash due to higher interest rates and additional fees, including cash advance, bank and ATM fees. 

• No grace period: When you take out a cash advance, interest typically begins to accrue immediately. This means you won’t have the option to pay off the balance without any interest charges.

• Impact on credit scores: Cash advances can affect your credit utilization ratio, which is the amount of credit you’re using versus your total available credit. It’s possible that a higher credit utilization ratio could cause your credit scores to drop.

If cash is a must, a cash advance could be helpful. But there may be other options to consider too, including emergency funds, borrowing from friends and family, or requesting a paycheck advance.

Here are some frequently asked questions about cash advances.

A credit card cash advance can be a convenient way to access cash if you don’t have it readily available—one of the many benefits a credit card can offer. But cash advances are typically more expensive than other types of purchases with a credit card. That’s why it’s important to understand what qualifies as a cash advance and how it works.

If you’re searching for your next credit card, Capital One can help. 

• See whether you’re pre-approved for credit cards without harming your credit scores. 

• If you’re looking to build your credit with responsible use, explore cards for people with fair credit. 

• Consider a credit card that offers rewards on every purchase, every day, with a cash back rewards card. 

• Monitor your credit report and score with CreditWise from Capital One. You don’t have to be a Capital One customer to access it, and using it won’t hurt your credit.