A credit card cash advance is a way to borrow cash against your card's credit line, and it is usually priced very differently from a purchase. Most cards charge a cash advance fee on each transaction, apply a cash advance APR that is often higher than the purchase rate, and start charging interest on the day the advance posts, with no grace period. Cash advances also draw on a separate, usually smaller limit inside your overall credit line. The sections below explain each piece with hypothetical numbers, then how a cash advance compares with neighboring concepts and the mistakes that make it more expensive than expected.
What counts as a cash advance
The obvious case is taking cash from an ATM with your credit card and its PIN, or asking a bank teller for cash against the card. The agreement usually defines the category more broadly, and several transactions can be treated as cash advances even though no cash changes hands:
- convenience checks that the issuer sends you, drawn against the card account;
- buying money orders, traveler's checks or foreign currency with the card;
- wire transfers and some person-to-person payment services funded by the card;
- other transactions the agreement lists as cash-like or cash equivalent.
Whether a particular transaction counts depends on how the merchant's payment is coded and on the issuer's definitions, so the same app payment can be a purchase on one card and a cash advance on another. When in doubt, check before you pay.
Term to look for in the cardholder agreement: cash advance and cash-like transactions, usually in the definitions section.
The cash advance fee
Most cards charge a fee on every cash advance, commonly expressed as a percentage of the amount or a minimum flat dollar amount, whichever is greater. The fee is added to your balance on the day of the advance.
A hypothetical card charges 5% or $10, whichever is greater:
- a $100 advance costs $10, because 5% would only be $5;
- a $400 advance costs $20;
- a $1,000 advance costs $50.
The ATM operator may add its own fee on top, and if the withdrawal is in another country, a foreign transaction fee can apply as well, depending on the card.
Term to look for: Cash Advance under "Transaction Fees" in the rates and fees table at the top of the agreement.
The cash advance APR and the missing grace period
Interest on a cash advance generally starts on the day it posts. The grace period that lets you avoid interest on purchases by paying in full usually does not apply to cash advances, so even paying the full statement balance does not avoid interest on the days before your payment arrives. The cash advance APR is also often higher than the purchase APR on the same card.
Continuing the hypothetical: a $400 advance at a 29% cash advance APR, repaid in full 30 days later.
| Cost | Amount |
|---|---|
| Cash advance fee (5%) | $20.00 |
| ATM operator fee | $3.00 |
| Interest: $400 × 29% ÷ 365 × 30 days | $9.53 |
| Total cost for one month | $32.53 |
That is about 8% of the amount borrowed for a single month, and the cost keeps growing for every month the advance stays unpaid.
Term to look for: APR for Cash Advances in the rates and fees table, and the line on how to avoid paying interest, which usually covers purchases only.
The cash advance limit
Your card usually has a cash advance limit, sometimes shown as an available cash or cash credit line, that is a portion of your overall credit limit. It is listed on your statement and in your online account, and it can be considerably lower than the full limit.
A cash advance also uses part of your overall credit line. A hypothetical: a card with a $5,000 limit and a $1,000 cash limit. A $400 advance, plus its fee, leaves $580 of cash available and reduces the available credit for purchases to $4,580. Because the advance and its fee are part of the balance, they count in your credit utilization like any other balance.
Term to look for: cash advance limit or available for cash, on the statement near the credit limit.
How payments are applied to a cash advance balance
A cash advance sits on your account as a separate balance with its own rate. When you pay more than the minimum, federal rules generally require the issuer to apply the excess to the balance with the highest APR first, which is often the cash advance. The minimum payment itself may go to a lower-rate balance, as the issuer chooses.
A hypothetical: you carry $1,200 of purchases at 22% and the $420 cash advance balance at 29%. If you pay only the minimum, the cash advance can stay on the account for a long time, accruing interest at the higher rate. If you pay $500 and the minimum is $40, the $460 above the minimum goes to the cash advance first and clears it.
Term to look for: the section on how we apply your payments.
How a cash advance compares with neighboring concepts
Several things sound similar and work very differently:
| Concept | What it is | Key difference from a cash advance |
|---|---|---|
| Purchase | Buying goods or services with the card | Usually has a grace period and a lower APR |
| Balance transfer | Moving a balance from another account onto the card | Has its own fee and rate, sometimes promotional |
| Debit card ATM withdrawal | Taking out your own money from a bank account | Not a loan, so no interest |
| Cash back rewards | Rewards earned on purchases | Unrelated; cash advances generally do not earn rewards |
| Cash back at checkout | Cash added to a store purchase | Usually offered on debit cards; on a credit card it may be treated as a cash advance |
Common mistakes with cash advances
Most of the cost of a cash advance comes from a few predictable mistakes:
- Using a credit card at an ATM as if it were a debit card. It is a loan, with a fee and interest from day one.
- Writing a convenience check without reading the offer. Some checks carry a promotional rate, others are priced as cash advances; the terms that come with them say which.
- Funding a payment app or buying a money order without checking how it is coded. A transaction you thought was a purchase can show up as a cash advance.
- Paying only the minimum afterward. The minimum may go to a lower-rate balance while the cash advance keeps accruing interest.
- Expecting rewards. Rewards terms generally exclude cash advances.
The fee table in the article on credit card fees you need to know places the cash advance fee alongside other charges, and the article on no foreign transaction fee credit cards covers card costs abroad, where ATM withdrawals on a credit card are a common surprise.
