What is a cash advance on a credit card?

A cash advance on a credit card is just what it sounds like: using a credit card to withdraw cash against the card’s credit line. While a cash advance can offer flexibility, there’s typically a trade-off in terms of fees and higher interest rates. And other types of transactions can also be considered cash advances—for example, money transfers via apps like PayPal and Venmo. 

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

Key takeaways

  • Cash advances allow people with credit cards to borrow money against their credit lines.
  • Credit card cash advances may have higher interest rates than typical credit card purchases do. Cash advances may also come with additional fees.
  • You can typically get a credit card cash advance at a bank, at an ATM, by online transfer or by using a convenience check sent by your credit card company. 
  • Other types of transactions may be considered cash advances. They include using a credit card to transfer money to people or businesses via apps like PayPal or Venmo, using a credit card to pay down debts like car loans, and exchanging dollars for foreign currency.

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What is a cash advance?

In general, a cash advance is a type of short-term loan that allows you to quickly access funds from a bank or other financial institution. It may be a helpful option if you have an urgent need for cash but don’t have the funds readily available in your checking account

Using a credit card is one way to get a cash advance. In this case, you borrow a certain amount of money against your card’s line of credit. It typically involves fees and a higher APR than standard purchases.

What is an example of a cash advance?

Using a credit card to get a cash advance at a bank or ATM is pretty straightforward. But credit card issuers might classify other transactions as cash advances, like these:

If a transaction is classified as a cash advance, additional fees and interest rates could apply. You can check with your credit card issuer to learn more about specific policies.

How do credit card cash advances work?

When a cardholder uses their credit card to get a cash advance, that amount is then added to their credit card balance. A credit card cash advance is different from getting cash using a debit card, which takes the funds from a person’s bank account. 

Keep in mind that credit card cash advances typically come with higher interest rates than typical credit card purchases do. They generally also involve fees. So before getting a credit card cash advance, it may help to understand how much you’ll likely owe after interest and fees.

How to get a cash advance on a credit card

Depending on your credit card issuer, you may be able to get money through a cash advance in these ways:

  • At a bank or credit union: Have a representative at a bank or credit union transact a cash advance using your credit card.

  • At an ATM: Insert your card at an ATM, enter your PIN and follow the instructions on the ATM screen. 

  • With a convenience check: If you’ve been given checks, sometimes called convenience checks, by your credit card issuer, you can fill one out, naming yourself as the payee. You can then either cash it or deposit it at your bank or other financial institution. But be sure to read the terms and conditions related to using convenience checks before choosing that option.

Cash advance limits: How much can you withdraw using your credit card?

The amount you can take as a credit card cash advance may depend on your card issuer’s cash advance limits. You can typically find your limit by reviewing your card’s terms or checking your credit card statement.

Cash advance fees: How much can it cost?

The cost of a credit card cash advance depends on a number of factors. You can check your account terms for specifics. 

What is a cash advance fee?

A cash advance fee is basically a service charge from your credit card issuer. Depending on your issuer, it can be either a flat fee or a percentage of the cash advance amount. It could be taken out of the cash advance when you receive it or it may be posted to your credit card bill.

What is a cash advance APR?

When it comes to credit cards, interest and annual percentage rate (APR) are often the same thing. Cash advances often come with a substantially higher APR than other types of purchases you make with the same card. 

Plus, credit cards typically don’t offer a grace period on cash advances. This means you’ll likely start accruing interest immediately.

What other fees are associated with cash advances?

You might have to pay a service charge if you take out a cash advance at an ATM, like you do for any other ATM transaction. Banks may also charge a fee for taking out a cash advance in person. 

What to consider before taking out a cash advance

It may help to do the following before getting a cash advance on a credit card:

  • Check your account terms. That’s where you’ll typically find information about the APR for cash advances, plus any other fees you could be charged.

  • Borrow as little cash from your credit card as possible. Plus, pay off your balance as soon as you can. If you need a plan for paying down your balance, you might consider a debt repayment tactic like the debt snowball method or debt avalanche method.

  • Consider how the cash advance might impact your credit. Your credit scores typically won’t be impacted if you’re prompt in repaying the money from the cash advance. But 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 hurt your credit scores.

Alternatives to a cash advance on a credit card

If you’re undecided about a cash advance, there might be other ways to access cash. Here are a few options to consider:

  • Use a debit card to access funds from your checking account.

  • Investigate personal loans.

  • Withdraw the funds from your savings account or an emergency fund.

  • Borrow money from family or friends.

Cash advance FAQ

Here are some frequently asked questions about cash advances:

A cash advance won’t directly impact your credit scores but it will use more of your available credit. And this can affect your credit utilization ratio, which is the amount of credit you’re using versus the total credit you have access to. It’s possible that a higher credit utilization ratio could lower your credit scores

The cost of a cash advance is added to your credit card balance. This means you can pay off the cash advance amount in the same way you’d make any other type of credit card payment.

Credit card cash advances in a nutshell

A credit card cash advance may seem like a convenient way to access cash if you don’t have it readily available. But it’s typically more expensive than making other types of purchases with your credit card. That’s why you may want to understand what qualifies as a cash advance, how cash advances work, how to use them responsibly, and what potential costs you could end up paying.

You may also want to explore the variety of benefits that come with the right credit card, including cash back on your everyday purchases. If that interests you, take a moment to compare Capital One cash back credit cards.

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