What Is a Credit Card Cash Advance? Fees, Risks and Alternatives
It's borrowing, not quick cash: Interest starts the day you withdraw with no grace period, and the most common credit card cash advance annual percentage rate (APR) is 30%, according to the Consumer Financial Protection Bureau (CFPB).
Fees add up fast: Issuers commonly charge the greater of $10 or 5% of the advance, plus possible out-of-network ATM fees.
Compare cheaper options first: Emergency savings, a salary advance or a personal loan may cost less than a credit card cash advance.
Quick Answer: What Is a Credit Card Cash Advance?
A credit card cash advance lets you withdraw cash using your credit card.
It’s a convenient way to borrow money because it can feel like withdrawing cash from a checking account. In most cases, you can enter a PIN at an ATM to take out the funds.
However, taking a cash advance on your credit card comes with a different set of costs and concerns. It isn’t cheap. The APR is generally higher than the rate you’ll pay for standard purchases, and most issuers charge an additional fee.
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How Does a Credit Card Cash Advance Work?
When you take out a credit card cash advance, the amount is added to your overall credit card balance. However, the debt is likely more expensive than an outstanding amount for other purchases. While rates vary, cash advance APRs are often around 10 points higher than purchase APRs. The interest typically begins accruing immediately, too, which is faster than purchases, which usually have a grace period.
If you’re hoping to use the cash advance feature on your credit card, keep in mind that the cash limit is likely much lower than your overall credit limit.
Taking cash out with a credit card | Taking cash out with a debit card | |
|---|---|---|
How much can you withdraw? | Pre-set limit, typically a fraction of your overall credit limit | Generally whatever it is in your account |
How much does it cost? | Varies by issuer, but expect to pay a percentage of the total cash amount | Typically no fee if you’re withdrawing at an ATM in your network |
How Can You Get Cash From a Credit Card?
Getting a cash advance from your credit card will vary based on your issuer’s options, but they likely include:
ATM: This feels just like a debit card withdrawal. You’ll insert the credit card and input a PIN to access the funds.
Go to a branch: If a bank branch is nearby, you can speak with a teller to withdraw the money.
Online transfers: Some banks let you transfer the amount from your credit card cash advance to a linked checking account.
Checks: Some issuers may also offer cash advance checks, too.
You could end up taking out a cash advance on your credit card without realizing it. For example, if you’re using a credit card to make bets online, those are typically treated as cash advances. This means that while it’s impossible to predict whether your wager will be successful, you’re guaranteed to lose some money to extra fees.
How Much Does a Cash Advance Cost?
Once you have a full understanding of the answer to “What is a cash advance on a credit card?” it’s essential to do more research on a more pressing question: How much are you going to have to pay for a cash advance? The answer depends on your credit card agreement.
Before you enter a PIN to access any money, consider these cost concerns:
Cash advance fees: Issuers commonly charge 3% to 5% of the total advance.
No waiting period on interest: While credit cards generally do not charge interest on purchases if the entire balance is paid in full by the due date, that does not apply to cash advances.
Potential ATM fees: If you’re in a bind and take out a cash advance at an ATM outside your bank’s network, you’ll likely pay additional fees.
Here’s a hypothetical scenario showing how much this could cost if you take out a $1,000 cash advance.
Charge | Amount |
|---|---|
Cash advance fee of 5% | $50 |
Interest after 30 days with an APR of 30% | $24.95 |
Out-of-network ATM fee | $5 |
Does a Cash Advance Hurt Your Credit?
Taking out a cash advance on your credit card will not automatically hurt your credit. As long as you make on-time payments, the advance looks like a balance of outstanding purchases. Credit reporting agencies don't analyze cash advances any differently than they do the rest of your financial behavior.
What to watch:
Your bill’s monthly due date: Don’t ever miss this. That rule applies whether you’re taking out a cash advance or paying back any other purchase.
Your overall credit utilization ratio: Credit reporting agencies will look at the collective balance you owe across all your cards. Generally, the lower your credit utilization, the better your credit score.
Your interest charges: Review your statement closely to understand how much money you paid to get the cash. You’ll want to keep this in mind to understand the true costs of borrowing.
Alternatives to a Credit Card Cash Advance
While a credit card cash advance is an easy option, the high fees mean it shouldn’t be your first choice. Instead of reaching for your card and heading to the ATM, consider these alternatives.
Alternative option | Why it might be cheaper | What else to consider |
|---|---|---|
You won’t pay interest or fees. | You’ll be draining part of your emergency fund, so make sure you leave enough set aside for other worst-case scenarios. | |
Salary advance | Some employers offer early access to your paycheck, and the fees are much lower than a cash advance. | Your company policy may not allow you to access as much money as you need. If you’re self-employed or don’t have this option, you’re out of luck. |
Asking a friend | A great friend or family member won’t charge you fees or interest right away. | You could put the relationship in an awkward position, so be clear about when you’ll repay. |
If you have excellent credit, the APR can be much lower than a credit card cash advance. | Additional fees can add up, and if your credit isn’t in great shape, this may be even more expensive. | |
Installment plan | Many credit card issuers are offering fixed installment plans with predictable fees that are lower than the APR for a cash advance. | This requires making the payment on the credit card. So, if you need actual cash for a purchase you can't make on a credit card, this isn’t a viable option. |
If Rent Timing Is the Issue
If you need a bit of breathing room in your budget, consider MoneyLion Split to make rent payments easier to manage. It’s an optional line of credit provided by MoneyLion, and approval and eligibility are required.
With MoneyLion Split, you pay your rent in two payments each month. You don’t need a MoneyLion One membership to use Split. You pay your landlord directly, so they don’t need to sign up or participate. There’s a 3% total fee across the two payments — 1.5% of the total monthly rent per payment. The fee may be waived if you meet qualifying direct deposit or account balance requirements.
Here’s how it works: Set aside up to 50% of your monthly rent in a MoneyLion Split Reserve account. You pay $0 out of pocket for rent on the first of the month. MoneyLion Split provides funds toward your rent payment, and you’ll use those funds to pay your landlord directly. You’ll repay the funds in two payments later in the month.
What To Do if You Take a Cash Advance
If you review all your options and determine a credit card cash advance is the best fit for your finances, follow these steps to minimize costs and keep your credit in good shape:
Confirm your payment amount: Review your statement to make sure your issuer shows the correct cash amount you took out.
Pay more if possible: You’ll pay interest from day 1, so try to contribute more to repay faster.
Avoid taking out more cash advances: If you regularly withdraw more money from your credit limit, it may signal you need to adjust your personal finances. These are costly ways to borrow money.
Raise an alarm bell if you are struggling to make your payments: Don’t wait until you miss a payment to talk with your issuer. If you’re concerned about your ability to afford minimum payments each month, address the situation proactively to avoid major impacts to your credit score.
Key Terms
Credit card cash advance: Withdrawing cash against your credit card's limit, which is treated as borrowing and usually costs more than a regular purchase.
Cash advance annual percentage rate (APR): The interest rate charged on a cash advance, typically higher than your purchase rate. The most common cash advance APR is 30%, per the Consumer Financial Protection Bureau (CFPB).
Cash advance fee: The charge for taking the advance, commonly the greater of $10 or 5% of the amount withdrawn.
Grace period: The window to pay off purchases in full before any interest applies. Cash advances don't get one, so interest starts right away.
Cash advance limit: The share of your overall credit limit you can take as cash, usually a fraction of the full limit.
Credit utilization ratio: The percentage of your available credit you're using. A cash advance raises your balance and can increase your utilization.
Sources
Consumer Financial Protection Bureau: Can I withdraw money from my credit card at an ATM?
Consumer Financial Protection Bureau: Data Spotlight: Credit card cash advance fees spike after legalization of sports gambling
Federal Reserve: Consumer Credit - G.19
Parts of this article were created with AI assistance. MoneyLion editors reviewed, fact-checked and edited the final version and are responsible for its accuracy.
Photo credit: bernie_photo / iStock.com
FAQs
A cash advance is a form of borrowing that comes with an interest rate and additional fees, while a debit card withdrawal accesses your money from your checking account without additional borrowing costs.
It depends, but credit card cash advance limits are typically a relatively small percentage of your total credit limit. For example, if your credit limit is $10,000, you might have a cash advance limit of $2,000.
Generally, no. Most issuers begin charging interest as soon as a cardholder makes a cash advance withdrawal.
Not automatically. As long as you repay the advance on time, your credit score should remain steady.
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MoneyLion Split is an optional line of credit provided by MoneyLion. Eligibility requires a MoneyLion Spend account in good standing. Approval and eligibility are required. Customers must provide a security deposit of up to 50% of their monthly rental payment to obtain the line of credit. We do not make rent payments directly to your landlord. Rent payments must be made using your MoneyLion Spend account and monthly advances are added to your Spend account to cover your rent payment. Payment history and other information may be reported to one or more national credit bureaus, late or missed payments to the line of credit may negatively impact credit. Fees may apply. See fee disclosure and Terms & Conditions for details.
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3% monthly rent advance fee applies to your repayment of your MoneyLion Split advance. The 3% fee is waived if:
Your MoneyLion Spend account holds at least 50% of your rent when payment is due.
Your average MoneyLion Spend account balance was at least 50% of your rent during the 30-day period ending when payment is due.
You have recurring direct deposits exceeding half the amount of your rent into your MoneyLion Spend account.
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