A credit card cash advance is just what it sounds like: using a credit card to withdraw cash against the card’s credit line. A cash advance can offer flexibility, but it generally comes with additional fees and higher interest rates than typical credit card purchases. Other types of transactions can also be considered cash advances, such as money transfers via apps like PayPal® and Venmo.
Learn more about getting a cash advance on a credit card, how much it may cost and possible alternatives.
What you’ll learn:
- Credit card cash advances allow cardholders to borrow money against their credit lines.
- Cash advances may come with fees and have higher interest rates than typical credit card purchases.
- You can typically get a credit card cash advance at a bank, at an ATM, by online transfer or by using a convenience check.
- Other types of transactions may be considered cash advances, including using a credit card to transfer money via apps like PayPal and Venmo, using a credit card to pay down debts like car loans and exchanging dollars for foreign currency.
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What is a cash advance?
In general, a cash advance is a type of short-term loan that allows you to quickly access funds from a bank or other financial institution. Using a credit card is one way to get a cash advance. In this case, you borrow a certain amount of money against your card’s line of credit. Credit card cash advances typically involve fees and a higher annual percentage rate (APR) than standard purchases.
What is an example of a cash advance?
Using a credit card to get a cash advance at a bank or an ATM is pretty straightforward. But credit card issuers might classify other transactions as cash advances, including:
- Peer-to-peer money transfers through apps like PayPal and Venmo
- Monthly bills paid with a credit card
- Loan payments on other debt, such as auto loans
- Wire transfers
- Traveler’s checks
- Money orders
- Foreign currency exchanges
- Lottery tickets
- Gaming chips and other wagers
If a transaction is classified as a cash advance, additional fees and interest rates could apply. You can check with your credit card issuer to learn more about its specific policies.
How do credit card cash advances work?
When a cardholder uses their credit card to get a cash advance, that amount is then added to their credit card balance. A credit card cash advance is different from getting cash using a debit card, which takes the funds from a person’s bank account.
Credit card cash advances typically come with higher interest rates than typical credit card purchases. They generally also involve fees. So, before getting a credit card cash advance, make sure you understand how much you’ll owe after interest and fees.
How to get a cash advance on a credit card
Depending on the credit card issuer, you may be able to get a cash advance by visiting your bank, withdrawing money at an ATM or writing a convenience check. Here’s a closer look at how these options work:
- Bank or credit union: Have a representative at a bank or credit union transact a cash advance using your credit card.
- ATM: Insert your card at an ATM, enter your PIN and follow the instructions on the screen.
- Convenience check: When you get a new credit card in the mail, your issuer may also send you blank convenience checks. You can fill out one of these checks and name yourself as the payee to get a cash advance. Then, you can either cash it or deposit it at your bank or other financial institution. But be sure to read the terms and conditions related to using convenience checks before choosing this option.
Cash advance limits: How much can you withdraw using your credit card?
The amount you can take as a credit card cash advance may depend on your card issuer’s cash advance limits. You can typically find your limit by reviewing your card’s terms or checking your credit card statement. Keep in mind that if you’ve used all of your available credit on purchases, you may not be able to take out a cash advance even if you haven’t reached your cash advance limit.
You may also be able to change your card’s cash advance limit or deactivate cash advances altogether. It depends on your issuer’s policies.
What is a cash advance fee?
A cash advance fee is basically a service charge from your credit card issuer. It could be taken out of the cash advance when you receive it or it may be posted to your credit card bill.
How much are cash advance fees?
A cash advance fee may be a percentage of the cash advance amount or a flat fee, depending on your issuer’s policies. And there may be additional fees, such as an ATM fee, depending on the method you choose. You can check your account terms for specifics.
What is a cash advance APR?
When it comes to credit cards, interest and APR are often the same thing. Cash advances often come with a substantially higher APR than other types of purchases you make with the same card.
Plus, credit cards typically don’t offer a grace period on cash advances. This means you’ll likely start accruing interest immediately.
What other fees are associated with cash advances?
You might have to pay a service charge if you take out a cash advance at an ATM like you do for other ATM transactions. Banks may also charge a fee for taking out a cash advance in person.
What to consider before taking out a cash advance
Cash advances can be an expensive way to access cash. Before getting a cash advance, consider the following:
- Check your account terms. That’s where you’ll typically find information about the cash advance APR and fees.
- Borrow as little cash from your credit card as possible. Minimizing the amount of cash you’re getting from your credit card can help you pay off your balance sooner. If you need a plan for paying down your balance, you might consider a debt repayment tactic like the debt snowball method or debt avalanche method.
- Consider how the cash advance might impact your credit. Your credit scores typically won’t be impacted if you’re prompt in repaying the cash advance. But cash advances can affect your credit utilization ratio, which is the amount of credit you’re using versus your total available credit. That means if the added balance of a cash advance goes unpaid for a while, it could hurt your credit scores.
- Talk to your lenders. If you’re thinking about using a cash advance to cover a loan payment, consider talking to your lender about other options first. Depending on the circ*mstances, they may be willing to work with you to change your payment date, make a repayment plan, or extend or defer your payment.
Alternatives to a cash advance on a credit card
If you’re undecided about a credit card cash advance, there might be other ways to access cash. Here are a few options to consider:
- Use a debit card to access funds from your checking account.
- Investigate personal loans.
- Withdraw the funds from your savings account or emergency fund.
- Borrow money from family or friends.
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Cash advance FAQ
Here are some frequently asked questions about cash advances:
Does a cash advance hurt your credit?
A cash advance won’t directly impact your credit scores, but it will use more of your available credit. And this can affect your credit utilization ratio, which is the amount of credit you’re using versus the total credit you have access to. It’s possible that a higher credit utilization ratio could lower your credit scores.
How do I pay off a cash advance on my credit card?
The cost of a cash advance is added to your credit card balance. This means you can pay off the cash advance amount in the same way you’d make any other credit card payment.
Is it OK to do a cash advance on a credit card?
Deciding to get a credit card cash advance is a personal decision. But remember, cash advances typically come with additional fees and higher interest rates than other transactions. And that can make them costly, especially if you can’t pay them back promptly.
Some people may also turn to payday loans or cash advance loans for quick access to cash. These are not the same as credit card cash advances. And it’s important to note that these short-term, high-interest loans can be risky and extremely expensive. In fact, some states prohibit them altogether because of their risk and high cost.
Key takeaways: Credit card cash advances
A credit card cash advance may seem like a convenient way to access cash if you don’t have it readily available. But it’s typically more expensive than making other types of purchases with your credit card. That’s why it’s important to understand what qualifies as a cash advance, how cash advances work, how to use them responsibly and what potential costs you could end up paying.
You may also want to explore the variety of benefits that come with the right credit card, including cash back on everyday purchases. You can compare Capital One credit cards to find one that’s right for you.
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- Explore Capital One’s credit cards for building credit with responsible use.
