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. A cash advance can offer flexibility, but it 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. 

• Banks and ATMs are common places to get a credit card cash advance.

• Other types of credit card transactions may also be considered cash advances, such as transferring money with apps like PayPal® and Venmo, paying down debts like car loans and exchanging dollars for foreign currency.

A cash advance is a type of short-term loan. With a credit card, you’re borrowing against your card’s line of credit. This is different from a cash withdrawal from a bank account, which uses the funds in your account.

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

Credit card cash advances typically involve fees and a higher annual percentage rate (APR) than standard purchases. Plus, credit card issuers typically don’t offer a grace period on cash advances. This means you’ll likely start accruing interest immediately. Here are some potential costs associated with cash advances. 

• Cash advance fee: A cash advance fee is a transaction charge from your credit card issuer. It could be deducted from the cash advance when you receive it. Or it might be added to your balance.

• Cash advance APR: Depending on the issuer, a cash advance fee may be a percentage of the cash advance amount or a flat fee. 

• ATM fee: If you use your card to get a cash advance at an ATM that’s out of network, you could be charged a fee.

• Bank fee: Your bank or credit union may charge a fee if you go in person.

Additional fees may also apply. You can check your account terms for specifics.

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 (P2P) 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

Cash advances might offer quick access to cash—access that doesn’t require a credit check. 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, it helps to consider a few things first.

• Additional costs: Cash advances can be an expensive way to access cash because of higher interest and fees.

• No grace period: When you take out a cash advance, interest typically begins to accrue immediately.

• 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. That means if the added balance of a cash advance goes unpaid for a while, it could have a negative effect on your credit scores.

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 if 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 rewards credit card that offers unlimited 1.5% cash back on every purchase, every day, with a cash back rewards card. 

• Monitor your credit report and score with CreditWise from Capital One. It’s free for everyone, and using it won’t hurt your credit.