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Key takeaways
- A cash advance lets you borrow money against your credit card’s cash advance limit, which may be lower than your purchase limit.
- Cash advances come with high fees and interest charges that start accruing right away with no grace period.
- Alternatives that may be more affordable include paycheck advances and personal loans.
Sometimes you’re faced with an unexpected expense and need cash immediately. A cash advance – borrowing money against your credit card’s limit – can provide quick funds, but it’s one of the most expensive ways to borrow due to high fees and immediate interest charges. Find out more about how a cash advance works, plus alternative financing options that may be more affordable.
How does a cash advance work?
A cash advance lets you borrow money from your credit card, either by withdrawing funds from an ATM, requesting a cash advance online or via mobile app, or using a convenience check. Your card issuer may charge a cash-advance fee (often expressed as a percentage of the amount advanced) and a higher interest rate than your purchase APR.
Interest starts accruing immediately – purchases have a grace period but cash advances generally do not. Your cash advance limit will also likely be lower than your purchase limit on your credit card.
How to get a cash advance on a credit card
Depending on your credit card provider, you can get a cash advance at an ATM, online, or via convenience check.
- At an ATM: You’ll use your credit card to withdraw cash – the same way you would with your debit card.
- Online or via mobile app: You can request a cash advance to be deposited into a linked checking account. You can then withdraw that money using your ATM card.
- Convenience checks: Some issuers mail convenience checks linked to your credit card account. When you write one, the amount is treated as a cash advance and added to your credit card balance.
Types of cash advances
The term “cash advance” most commonly refers to withdrawing cash from a credit card. However, there are some other short-term financing options, such as payday loans and merchant cash advances, that are sometimes referred to as cash advances as well. These options work differently than credit card cash advances and have their own fees and repayment structures.
| Type of Cash Advance | Typical Transaction Fees | Typical APR |
|---|---|---|
| ATM | 3% – 5% of the borrowed amount | 29% |
| Convenience check | 3% – 5% of the borrowed amount | 29% |
| Payday loan | $10 – $30 for every $100 borrowed | 400% or more |
| Merchant cash advance | 10% – 20% of daily receipts | Up to 350% |
ATM cash advance
Taking out a cash advance at an ATM is a common option. You use your credit card to withdraw money from an ATM, and your credit card provider charges you a one-time cash advance fee.
Interest starts accruing on the first day and appears on your credit card bill at the end of the statement period. Unless your card is maxed out, you should be able to take out a cash advance – but fees and APRs are high.
Convenience check cash advance
Some credit card companies send convenience checks you can use for cash advances. You can deposit these pre-approved checks or give them to someone who can’t accept cash or card payments.
Contact your credit card company to request a convenience check. Fill it out for the amount you need and deposit it at your bank. Since this is a cash advance, your credit card company will likely charge substantial fees and interest.
Payday loan
A payday loan is not the same as a credit card cash advance, but it’s sometimes referred to as a cash advance loan. Payday loans can offer fast cash with no credit check, but their fees and interest can be extremely high.
Payday loans require repayment on your next paycheck, though you can sometimes “roll over” the loan for additional fees. The exorbitant rates can trap borrowers in a cycle of debt.
Compared to payday loans, personal loans tend to be much cheaper.
Merchant cash advance
Merchant cash advances are a type of business financing for small business owners. They let you borrow a lump sum in exchange for a percentage of your business’s future daily debit or credit card sales, plus fees.
You can often get a merchant cash advance even if you have poor credit, with funds arriving as early as the next day. However, merchant cash advances can be expensive, with APRs that can reach 350%.
What is a cash advance fee?
Cash advance fees typically add up to 3% to 5% of your cash advance amount. If you take out $500, for example, expect a fee of $15 to $25. You can find your cash advance fees in your credit card agreement. Take note of the interest rate, as well, which will also add to your costs of borrowing.
How much does a cash advance really cost?
The total cost depends on several factors:
- Cash advance fee: 3% to 5% of the amount borrowed
- Cash advance APR: Often around 29%
- Repayment time: The longer you carry the balance, the more interest accrues
- ATM fees: $0 to $5 if using an out-of-network ATM
For example, a $1,000 cash advance with a 3% fee ($30) and 29% APR would cost you $116 in total fees and interest if paid off over six months with monthly payments of $181.
How do you pay off a cash advance?
You pay off a cash advance through your monthly credit card payments. However, most card issuers apply your minimum payment to the balance with the lowest interest rate first – so your cash advance balance may not decrease if you have other debt on the card.
To pay off a cash advance faster, try these strategies:
- Pay more than the minimum. Any amount above the minimum typically goes toward your highest-interest balance first.
- Pay it off immediately. If possible, pay the full cash advance amount before your statement closes to minimize interest charges.
- Avoid new purchases. Focus your payments on the cash advance until it’s gone.
Pros and cons of a cash advance
Cash advances offer quick access to funds, but they come with significant costs. Before taking a cash advance, weigh these tradeoffs:
| Pros | Cons |
|---|---|
| Easy access to cash from an ATM or online, no credit check required | High interest rates and fees |
| Fast cash when you need it, without a lengthy approval process | Can increase your credit utilization, which may lower your credit score |
| No collateral or income verification required because you borrow against your credit limit | Most cards cap the amount you can withdraw, limiting how much you can access |
| Convenient for emergencies when other options are unavailable | No grace period – interest starts right away and adds up quickly |
When should you consider a cash advance?
Cash advances can be a helpful tool in a true emergency, but they aren’t always the best choice. Because they come with high fees and interest, pause and evaluate your needs before heading to the ATM.
A cash advance might make sense if:
- You have a critical emergency, like a car repair or medical need, that requires cash immediately.
- You cannot use a credit card directly for the payment.
- You have a concrete plan to pay off the balance quickly, ideally within a few weeks.
- The cost of the cash advance is lower than the consequence of not having the cash (like a late fee on rent or a reconnection fee for utilities).
You might want to avoid a cash advance if:
- You’re using it for discretionary spending or non-essential purchases.
- You’re already struggling to make minimum payments on your credit cards.
- You don’t have a clear way to pay it back soon, which could lead to a cycle of debt.
- You have access to lower-cost alternatives, like a personal loan or borrowing from a friend.
Alternatives to cash advances
Cash advances are expensive and can take a long time to pay off, especially if you’re already carrying credit card debt. Consider these lower-cost alternatives first:
- Paycheck advance: Cash advance apps like MyPay® from Chime® let you get up to $500 of your pay before payday. There are no mandatory fees, no interest, and no credit checks.1 Just open the Chime app, see how much of your pay you’re eligible to take as an advance ahead of payday, and select how much you want.
- Personal loan: In many cases, taking out a personal loan is more affordable than getting a cash advance because it may offer better borrowing terms.
- Instant loan: This is a type of small, short-term personal loan for use in emergencies. Learn more about instant loans to see if they could be a good option.
- Overdraft protection: If you need a small cash advance, a service like SpotMe® from Chime can help. Chime spots you money fee-free when you overdraw your account by up to $200.2
- Friend or family member loan: Asking a trusted person for money can be uncomfortable, but it’s often better than taking on high-interest debt from a lender. If you choose to borrow money from a family member or friend, establish a clear repayment plan and pay it off promptly
Be sure to consider all your options to see if there’s a more affordable way to access the cash you need.
What to do before taking a cash advance
Taking cash advances can be a slippery slope into debt. Before you commit to the fees and interest, review your other options. Could you use a fee-free overdraft service? Is a personal loan available with better terms? Could you ask for a paycheck advance?
If you decide a cash advance is your best path forward, have a repayment plan ready. Paying it off as soon as possible will help you save money on interest and keep your financial progress on track.
For other methods to access funds quickly during an emergency, review our guide on how to get money instantly.
Frequently asked questions about cash advances
Do cash advances hurt credit?
Cash advances increase your credit utilization ratio – the amount of credit you’re using compared to your total available credit – which can lower your credit score. Taking them frequently may also signal to lenders that you’re struggling financially, making you appear riskier. Plus, late payments on cash advance balances can damage your score.
Is taking a cash advance a good idea?
Cash advances work best for dire emergencies where cash is the only option and you can pay it back quickly. Due to high costs, explore cheaper alternatives first and use cash advances only as a last resort.
How much is a cash advance fee for $1,000?
A $1,000 cash advance may cost about $74 total if paid back within 30 days – that’s a $50 fee (5% of $1,000) plus roughly $24 in interest at a 29% APR. Your actual costs may vary based on your card’s terms.
Can I get a cash advance with bad credit?
Yes, you can get a cash advance with bad credit. Since a cash advance uses your existing credit card line, there is no additional credit check required. As long as you have available credit on your card, you can access a cash advance regardless of your current credit score.
What is the difference between a cash advance and a loan?
A cash advance uses your existing credit card limit for instant access without approval, but charges higher interest with no grace period. Personal loans require an application and credit check but may offer lower rates and structured repayment terms.
What's the difference between using a debit card and a credit card at the ATM?
Using a debit card withdraws your own money from your checking account – with no fees if you use an in-network ATM. Using your credit card means taking a loan from your card issuer, so you’ll pay cash advance fees plus interest.
Is getting a credit card cash advance different than making a credit card purchase at a store?
Yes. While both use your credit card, cash advances generally involve higher fees and higher interest rates. Interest starts accruing immediately on a credit card cash advance (without a grace period).
How much cash can you get with a cash advance?
Most cards have a cash advance limit that’s lower than your overall credit limit. Check your card agreement or call your card issuer to find your specific limit, or try checking the top of your statement.
Are there any other types of credit card cash advances?
Card issuers may treat money orders, wire transfers, gambling transactions, and cryptocurrency purchases as cash advances and charge higher fees and interest.