What Is a Cash Advance Fee? Costs and How to Avoid Them

A cash advance is essentially a short-term loan from your credit card company. Instead of buying something with your card, you’re borrowing cash against your credit limit. The key difference between a debit card withdrawal and a cash advance? With a debit card, you’re pulling out your own money. With a cash advance, you’re borrowing – and that borrowing comes with fees and interest.

You might take out a cash advance at an ATM using your credit card, at a bank teller window, or even through certain transactions you might not expect. Buying money orders, purchasing casino chips, or sending money through apps like Venmo with a credit card can all trigger cash advance fees. Many people don’t realize they’ve taken a cash advance until they see the charge on their statement.

When you use your credit card to get cash, the transaction follows different rules from a regular purchase. Your card issuer treats it as a separate type of borrowing with its own terms, limits, and costs.

Here’s what typically happens when you take a cash advance:

• You request cash: This could be at an ATM, a bank branch, or via a cash-equivalent transaction, such as a money order.
• Your issuer charges a fee: A cash advance fee hits your account immediately – you don’t wait until your next statement.
• Interest starts right away: Unlike purchases, there’s no grace period. Interest begins accruing from day one.
• A separate limit applies: Your cash advance limit is usually much lower than your total credit limit – often just a fraction of it.

So if you have a $5,000 credit limit, your cash advance limit might only be $1,000 or $1,500. Check your card agreement or call your issuer to find your specific limit before you find yourself short at an ATM.

Cash advances come with multiple fees that stack up. Understanding each one helps you see the full cost before you borrow.

Cash advance transaction fee

This is the upfront charge your credit card company applies the moment you take out a cash advance. Most issuers charge either a percentage of the amount – typically 3% to 5% – or a flat minimum fee, like $10 – whichever is greater.

Let’s say you withdraw $500 and your card charges 5%. You’d pay a $25 fee right off the bat. If you only withdrew $100, the $10 minimum would likely kick in instead. Either way, you’re paying just to access the money.

ATM or bank fee

In addition to your card issuer’s fee, the ATM or bank where you get cash may charge its own fee. The average ATM fee in 2025 was $4.86 per transaction. You can often avoid this fee by using only in-network ATMs for cash withdrawals.

Cash advance APR

The interest rate for cash advances is almost always higher than your regular purchase APR. The average purchase rate for credit cards is 22.3%, but cash advance APRs can exceed 30%.

Here’s the part that really stings: interest starts growing immediately. With regular purchases, you have a grace period of at least 21 days to pay off your balance before interest kicks in. Cash advances don’t offer that buffer. From the moment the transaction posts, the clock is ticking.

Cash advances aren’t always the wrong choice, but they come with real trade-offs. Here’s a clear look at both sides.

Pros

• Fast access to cash: You can get money quickly in an emergency without filling out a loan application or waiting for approval.
• No credit check required: Since you’re borrowing against your existing credit line, there’s no additional inquiry on your credit report.

Cons

• High fees and interest rates: Between the upfront fee and elevated APR, costs add up fast – especially if you carry the balance.
• No grace period: Interest starts immediately, unlike regular credit card purchases, where you have time to pay before interest kicks in.
• Potential impact on credit utilization: A cash advance increases your credit card balance, which can raise your credit utilization ratio. Credit utilization – the amount of credit you’re using compared to your total available credit – is a key factor in calculating your credit score.

The best way to handle cash advance fees? Avoid them when you can. A few straightforward moves can help you sidestep the costs entirely.

Check your card terms

Before you ever take a cash advance, take a few minutes to review your credit card agreement. Look for the cash advance fee percentage, the APR, and your cash advance limit. Knowing the details ahead of time helps you make better decisions when you’re in a pinch – and might convince you to explore other options first.

Use a debit card instead

If you have money in your checking account, withdrawing cash with a debit card is usually free at in-network ATMs. You’re accessing your own funds, so there’s no borrowing or interest to worry about. It’s a simple swap that can save you real money.

Build an emergency fund

Even a small emergency fund can help you avoid turning to expensive borrowing options when something unexpected comes up. Starting with a goal of $500 can cover many common emergencies – a car repair, a medical copay, or an appliance replacement.

Consider setting up automatic transfers to a savings account each payday. Even $20 or $50 at a time adds up over a few months. Chime® makes this easier with features like Automatic Savings and Round Ups on purchases.¹

If you need cash quickly, several options may cost less than a traditional cash advance. Here are a few worth considering.

Fee-free overdraft

Some financial institutions offer overdraft coverage without the hefty fees traditional banks charge. SpotMe^® from Chime, for example, lets eligible members overdraw their account on debit card purchases with no overdraft fees – up to $200 depending on account activity and other eligibility requirements.²

Earned wage access

Earned wage access services let you access money you’ve already earned before your official payday. MyPay^® from Chime gives eligible members access to up to $500 of their paycheck early, helping bridge the gap between paychecks without borrowing or paying interest.³

Personal loans

For larger amounts, a personal loan from a bank or credit union typically offers a lower APR than a cash advance. The application process takes longer, and you’ll likely go through a credit check. However, the savings on interest can be substantial if you’re borrowing more than a few hundred dollars.

Borrowing from friends or family

It’s not always comfortable to ask, but borrowing from someone you trust can be a zero-cost option. If you go this route, consider putting the terms in writing – the amount, when you’ll pay it back, and whether there’s any interest. A simple agreement can protect both the money and the relationship.

When you need cash fast, you might think a cash advance is your best option. But taking out cash against your credit limit comes with fees and interest that quickly add up. Options like SpotMe and MyPay from Chime can get you money when you need it without the added fees. Get started with Chime today.