What is a Credit Card Cash Advance and the Associated Fees? (2024)

FAQs

What is a Credit Card Cash Advance and the Associated Fees? ›

Cash advance fee: Your card issuer often charges a cash advance fee, which is typically 3% or 5% of the total amount of each cash advance you request. For example, a $250 cash advance with a 5% fee will cost you $12.50.

September 3, 2024 • 5 min read. By Jennifer Brozic. Quick Answer. Credit card companies charge a cash advance fee when you access your card's line of credit to get cash instead of making a purchase. Fees typically range from 3% to 5% of the advance amount.

“Unlike a debit card withdrawal, in which you're accessing your own funds, with a cash advance your credit card company is essentially lending you money and charging your account. The charge will likely cost you; cash advances generally have a transaction fee and a higher annual percentage rate (APR).

Cash advance fee

Card issuers typically charge a 3% or 5% fee per cash advance which can add up if you withdraw hundreds of dollars. How to avoid cash advance fees: Instead of taking out a cash advance, consider borrowing money from family or friends or take out a personal loan (which usually offer better terms).

Using your credit card for a cash advance doesn't directly affect your credit score. Your credit report won't show that you used your credit card to get cash. However, the cash advance does increase your credit card balance and could hurt your credit score if it pushes your credit utilization ratio too high.

While you will not be able to withdraw cash from a cash machine on any credit card fee-free, there are credit cards that allow you to access cash or spend on your card without paying interest. Here's how they work: 0% money transfer cards: Make a payment from your credit card as cash straight into your bank account.

Cash Advances Don't Have a Grace Period

Credit card purchases have a grace period in which you'll have about a month to pay back the money you borrowed interest free. However, most cash advances don't have a grace period, and interest will start to accrue the same day you take your advance.

You'll usually be charged far more for a cash advance than you would if you simply made a purchase of the same value using your credit card. This is because there is generally a higher interest rate for cash advances and additional fees charged.

If you must take out a cash advance, it only makes sense to do so when you know you'll have the money to pay it off as fast as you can. Otherwise, the interest piles up with every passing day. The balance might tip in favor of a cash advance if you're using a card with no cash advance fee.

What is the limit on a credit card cash advance? ›

Cash advances are typically capped at a percentage of your card's credit limit. For example, if your credit limit is $15,000 and the card caps your cash advance limit at 30%, your maximum cash advance will be $4,500.

Taking out a cash advance may seem like a good idea in the moment, but it can quickly lead you to rack up debt. We recommend avoiding a cash advance altogether and opting for some alternative options that have better terms. Borrow from family or friends: You can ask family or friends for a loan.

Ask your card issuer for convenience checks. These are checks you can write that are tied to your credit card account. Wire money to yourself through a money transfer service, such as Western Union, and pay with your credit card. Purchase a money order with your credit card, if you can find a merchant that allows this.

The cash advance fee is an amount you're charged upfront to withdraw cash using your credit card. The credit card company charges this fee as soon as you take out a cash advance. Cash advance fees typically cost $10 or 3% to 6% of the cash advance amount — whichever is greater.

If you pay off your balance in full by the statement due date, you won't pay any interest.

Each day, they take the outstanding balance of your cash advance and apply the daily interest rate, which is the annual interest rate divided by 365 (for most credit cards). This daily interest is then added to your balance.

In addition, there's often a flat fee associated with credit card cash advances, typically between 3% and 8% of the total amount you take out. For example, if you take out a $1,000 cash advance with a 3% flat fee, you'll be paying an additional $30 on top of the interest that immediately starts accruing.