What is a cash advance on a credit card? It’s when you use your credit card to withdraw physical cash against your credit limit. Helpful in a pinch? Sure. Something you should do all the time? Probably not (it comes with high fees and interest).
If you’re thinking about initiating a credit card cash advance, be sure to read this article first. There are a few major red flags to watch out for.
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How does a cash advance work?
A cash advance on a credit card is when you use your credit card to get physical cash from your lender. If your credit card offers this feature, then you’ll be able to withdraw physical cash up to an approved limit from an ATM or bank branch.
Just beware: Cash advances aren’t free money. They’re pricey short-term loans. You’ll have to pay back any money you borrow, plus interest and fees.
Credit card cash advance vs. debit cards
A credit card cash advance is different from using your debit card to withdraw cash from your account.
A credit card cash advance = a loan that you have to repay.
A debit card withdrawal = accessing money you already have.
👉 What is the Difference Between a Credit Card Vs. Debit Card
Credit card cash advance vs. cash advance apps
Despite the similar-sounding names, credit card cash advances are also different from cash advance apps.
A credit card cash advance = a loan that you have to repay.
A cash advance app = accessing a portion of your already-earned wages before payday.
One is borrowing money. The other is accessing your own money (via your wages).
Cash advance apps work by linking to your bank account to verify your income, then letting you withdraw a portion of what you’ve already earned, with the amount automatically repaid when your regular paycheck deposits.
👉 How to Find Instant Cash Advances Online
How to get cash from your credit card
Want to learn how to get cash from your credit card? There are 4 main ways to get physical cash using a cash advance:
📍ATMs: You can use your credit card to get cash from an ATM, similar to a debit card. Usually, you need to set up a PIN in advance, which you can do by calling the number on the back of your card. If you haven’t set up a PIN yet, fear not; you don’t always need one.
📍 Online: Many credit cards allow you to transfer money to your bank account online. Just log in to your account and follow the instructions to set up a cash advance. This helps you get money in your checking account, which you can then withdraw as cash.
📍 In person: Most bank branches can help you initiate a cash advance. Just make sure that you’re visiting a bank in your credit card’s network.
📍 Convenience checks: Some credit cards issue checks linked to your account, and you can write one to yourself for cash.
👉 How to Get a Cash Advance on a Credit Card: 6 Strategies
👉 How to Get Cash From a Credit Card Without a PIN
How much can you withdraw using a credit card cash advance?
The amount you can withdraw using a credit card cash advance is usually a percentage of your overall credit limit.
For example, if your cash advance cap is 30% and your total credit limit is $10,000, then you’ll be able to get a cash advance of up to $3,000 ($10,000 * 30% = $3,000).
To learn your card’s cash advance credit line, just search through the terms and conditions for the section on cash advances.
What are the fees associated with cash advances?
Cash advances aren’t free, and you should be prepared for any and all fees before requesting one. Here are the most common fees to watch out for:
💸 Transaction fee: Most credit cards charge a percentage of the cash advance upfront or a flat fee. These fees typically range from 3% to 5% of the transaction, up to about $10. For example, if your card’s transaction fee is 5%, then you’ll have to pay $5 to take out $100 (5% of $100).
💸 Annual Percentage Rate (APR): You’ll have to pay interest on the money you borrow, and beware: interest typically starts accruing almost immediately. You don’t get an interest-free grace period to repay your debt, like you do with credit card purchases.
💸 Other fees: There can be additional fees, such as an ATM surcharge or extra fees if you use the credit card company’s convenience checks to take a cash advance.
👉 12 Credit Card Fees and How to Avoid Them
When to consider using a cash advance on a credit card
Cash advances on credit cards are best left for emergencies, given their high fees, high interest rates, and the fact that they start accruing interest almost instantly.
Before taking out a credit card cash advance, consider getting cash using these options:
- Access MoneyLion Instacash cash advances
- Requesting an advance from your employer
- Exploring a side hustle
- Using a cash advance app
If you can’t get cash from other sources, then a cash advance on a credit card is still a viable, yet expensive, solution.
👉 4 Fast and Easy Ways to Get Cash Today
Factors to consider before taking out a cash advance
Here are a few considerations to think about before taking a credit card cash advance.
✅ Interest rates: Rates are typically higher for cash advances when compared to regular credit card purchases, and interest starts accumulating immediately. This is especially important if you live on a fixed income and your budget is already tight.
✅ Cash advance fees: Most credit cards will charge a flat fee or a percentage of the cash you take in advance.
✅ Credit limit: Your cash advance will typically be capped at a percentage of your overall credit limit, so it’s a good idea to know what it is and leave yourself some room. Don’t max out your credit with your cash advance.
✅ Repayment plan: Ensure you understand the repayment timeframe and all the costs associated with the advance.
Alternatives to a cash advance on a credit card
Credit card cash advances aren’t the only way to get cash quickly. Here are a few alternatives that you can explore:
↔️ Cash advance apps: These apps, like Instacash®, let you access a portion of your paycheck before you are paid once you qualify.
↔️ Take out a personal loan: A personal loan from a bank or other lender may often have lower interest rates and more favorable terms than a cash advance on a credit card.
MoneyLion can help you find personal loan offers based on your background and the info you provide. You can get matched with offers for up to $50,000 from top providers. You can compare rates, terms, and fees from different lenders and choose the best offer for you.
↔️ Peer-to-peer lending: Borrowing money from individual investors often offers competitive interest rates and flexible repayment options.
↔️ Transfer your balance to another card: If you need cash to pay a credit card bill, consider using a balance transfer card. These cards can help you hit pause on interest payments, making it easier to repay your balance. Explore our 8 favorite balance transfer cards.
If you need a portion of your money earlier, MoneyLion’s Instacash® can help you access up to $500 with no interest and no credit check.
↔️ Line of credit: Banks and other financial institutions offer lines of credit similar to a credit card that typically have lower interest rates.
↔️ Borrow from family or friends: Friends and family might be willing to lend you money, and they’ll probably skip the interest altogether!
Cash Advances on a Credit Card: Think Twice Before Cashing Out
A credit card cash advance can be a viable solution if you absolutely need physical cash (like if you’re in a foreign country, where credit card readers are as nonexistent as decent bathrooms). But beware: they’re one of the priciest ways to get cash.
High fees, sky-high interest, and zero grace period mean cash advances are usually better off as your backup plan, not your first choice.
The good news? You’ve got smart options.
Cash advance apps like Instacash®, personal loans, and employer paycheck advances can help you cover today’s needs.
FAQs
Can I get a cash advance on any credit card?
No, not every credit card offers cash advances, so be sure to double-check your cardholder agreement or app before trying to withdraw cash.
Can I use a cash advance to pay off other debts?
Technically, yes, but this might be like trying to put out a fire with gasoline, since a credit card cash advance is one of the priciest ways to borrow money.
Does taking a cash advance affect my credit score?
Yes, you can minimize some interest costs by paying back your advance as soon as possible.
Does taking a credit card cash advance affect my credit score?
The advance itself usually doesn’t hurt your score, but racking up high balances and missing payments probably will, so proceed with caution whenever taking out a cash advance.
