Key takeaways
A credit card cash advance lets you borrow cash against your existing credit line, so your issuer typically won't run a new credit check.
Cash advances often come with an upfront fee, a higher APR than purchases and no grace period.
Payday lenders sometimes call their loans cash advances, but those loans work differently and can cost far more.
Lower-cost options may include credit union payday alternative loans, personal loans and getting part of your pay before payday.
When an unexpected bill hits and you need money fast, borrowing cash from your credit card can look like an easy fix. It's also one of the priciest ways to borrow, thanks to upfront fees and interest that starts right away. Here's how a cash advance works, what it really costs, how it can affect your credit and which lower-cost options to consider.
What is a cash advance?
A credit card cash advance is a short-term loan you take from your credit card's available credit line. You can get the money from an ATM, through a convenience check or as a transfer to your bank account. Your card issuer then adds that amount, plus fees, to your card balance.
This kind of borrowing draws on credit you already have, so your issuer typically doesn't run a new credit check. The tradeoff is cost. These advances often carry an upfront fee and a higher interest rate than purchases, and they typically don't earn rewards.
Payday lenders sometimes also call their loans cash advances, and those loans work differently. A payday loan comes from a separate lender, charges a fee for every $100 you borrow and typically comes due on your next payday. Online ads for cash advance loans with no credit check may point to these payday-style lenders rather than your credit card.
How does a cash advance work?
You can borrow money from your credit card at an ATM, through your issuer's website or app, or with a convenience check. Your card issuer may charge an upfront fee, often a percentage of the amount you take out. You'll also likely pay a higher annual percentage rate, or APR, than you pay on purchases.
Interest starts adding up right away. Purchases usually come with a grace period – a window when new charges don't collect interest if you pay in full. Cash advances generally have no grace period.
How to get a cash advance on a credit card
Depending on your credit card provider, you can borrow cash at an ATM, online or with a convenience check. Here's how each option works.
At an ATM: You'll use your credit card to withdraw cash – the same way you would with your debit card.
Online or through a mobile app: You can request a transfer into a linked checking account, then withdraw the money with your debit card.
With a convenience check: Some issuers mail checks tied to your account. Any check you write adds to your balance as a cash advance.
Cash advance limits
Your cash advance limit usually covers only a portion of your total credit line. That means the amount you can take out as cash may be lower than your credit limit for purchases.
You can find this limit on your monthly statement or in your card agreement. You can also call your card issuer and ask before you head to the ATM.
Types of cash advances
The term "cash advance" most often means withdrawing cash from a credit card. Some other short-term financing options, such as payday loans and merchant cash advances, use the name too. These options work differently than card advances and carry their own fees and repayment structures.
Type of cash advance | Typical transaction fees | Typical APR |
|---|---|---|
ATM | 3% – 5% of the borrowed amount | |
Convenience check | 3% – 5% of the borrowed amount | Often close to 30% |
Payday loan | $10 – $30 for every $100 borrowed | Almost 400% at $15 per $100 over two weeks |
Merchant cash advance | Varies – can be very high |
ATM cash advance
Using an ATM is a common way to borrow against your card. You use your credit card to withdraw money, and your credit card provider charges you a one-time cash advance fee.
Interest starts on the first day and shows up on your credit card bill at the end of the statement period. As long as you have available cash credit, you can usually take out an ATM advance. Just expect high fees and APRs.
Convenience check cash advance
Some credit card companies send convenience checks you can use to borrow against your card. 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 counts as an advance, your credit card company will likely charge substantial fees and interest.
Payday loan
A payday loan is a small, short-term loan that typically comes due on your next payday. It isn't the same as borrowing against your credit card, but lenders sometimes call it a cash advance loan. Payday loans can offer fast cash with no credit check, but their fees and interest can run extremely high.
Payday lenders typically expect repayment from your next pay. Some lenders let you "roll over" the loan by paying the fee due plus a new fee to extend the due date. Those repeat fees can lead to a cycle of debt.
Personal loans may cost less than payday loans.
Merchant cash advance
Merchant cash advances offer 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 debit or credit card sales, plus fees.
This kind of financing can move quickly, but it can also get expensive. The Federal Reserve cites one advertised offer with a factor rate of 1.15 – meaning you'd repay $1.15 for every $1 – that works out to an estimated APR of about 70%.
What is a cash advance fee?
A cash advance fee is the upfront charge your card issuer adds when you take out cash. Card issuers typically charge 3% to 5% of the amount, or about $10, whichever is higher. If you take out $500, for example, expect a fee of $15 to $25.
Your credit card agreement lists the exact fee. Take note of the interest rate too, since it also adds to your costs of borrowing.
How much does a cash advance really cost?
The total cost depends on several factors. Here's what adds up.
Cash advance fee: Typically 3% to 5% of the amount borrowed
Cash advance APR: Often close to 30% on many cards
Repayment time: The longer you carry the balance, the more interest you'll pay
ATM fees: About $4.86 on average at an out-of-network ATM
For example, say you borrow $1,000 with a 3% fee of $30 and a 29% APR. If you pay the fee upfront and repay the advance over six months, you'd pay about $181 a month. That comes to roughly $86 in interest plus the $30 fee, or about $116 in total fees and interest.
If your issuer adds the fee to your balance instead, your total climbs to about $119.
How does a cash advance affect your credit?
Borrowing cash on your card can affect your credit score in a couple of ways. Here's what to watch.
Higher credit utilization: The advance adds to your balance, which raises your credit utilization ratio – the share of your available credit you're using.
Missed-payment risk: If high costs make it harder to pay on time, a late payment may negatively impact your score.
Credit utilization falls under amounts owed, which makes up about 30% of your FICO® Score, a type of credit score many lenders use. Paying down the advance quickly can help lower your utilization.
Making on-time payments can help build positive credit history and may positively impact your credit score. A clear repayment plan makes those on-time payments easier to keep up.
How do you pay off a cash advance?
You pay off a cash advance through your monthly credit card payments. Under federal rules, card issuers must generally apply any amount above your minimum to the balance with the highest interest rate first.
Your card issuer generally decides where your minimum payment goes. If you carry other debt on the card, your cash advance balance may shrink slowly when you pay only the minimum.
To clear the balance faster, try these strategies:
Pay more than the minimum. Extra dollars above the minimum generally go to your highest-APR balance, which often means the cash advance.
Pay it off immediately. If possible, repay the full amount before your statement closes to cut interest charges.
Avoid new purchases. Focus your payments on the 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 you borrow, weigh these tradeoffs:
Pros | Cons |
|---|---|
Easy access to cash from an ATM or online, with no new credit check | 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 check because you borrow against your existing credit limit | Many cards cap the amount you can withdraw, limiting how much you can get |
Convenient for emergencies when other options aren't available | No grace period – interest starts right away and adds up quickly |
When should you consider a cash advance?
Cash advances can help in a true emergency, but they aren't always the right 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:
Borrowing against your card can work as a short-term fix in a few situations.
You have a critical emergency, like a car repair or medical need, that requires cash immediately.
You can't 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 borrowing is lower than the cost of going without, such as a late fee on rent.
You might want to avoid a cash advance if:
In other cases, a lower-cost option may serve you better.
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 cheaper options, like a personal loan or borrowing from a friend.
Alternatives to cash advances
Cash advances can cost a lot and take a long time to pay off, especially if you already carry credit card debt. Consider these lower-cost alternatives first:
Payday alternative loan I: Some federal credit unions offer PAL I loans of $200 to $1,000, capped at 28% APR.
Payday alternative loan II: Federal credit unions may also offer PAL II loans up to $2,000, with terms up to 12 months.
Personal loan: A personal loan may cost less than a credit card cash advance, especially if you have good credit and qualify for a lower interest rate.
Friend or family member loan: Asking someone you trust may feel awkward but often costs less than high-interest debt. Agree on a clear repayment plan.
Chime® also offers two tools for eligible members. MyPay® is a line of credit that lets you get up to $750 of your pay before payday. (see disclosure 1) SpotMe® offers fee-free overdraft on Chime Visa® Debit Card and Chime Visa® Credit Card purchases and cash withdrawals, starting at $20 and up to $200. (see disclosure 2)
Compare your options to see if there's a more affordable way to get the cash you need.