Credit Card Cash Advances, Explained
What a cash advance is
A cash advance is borrowing physical cash against your credit card limit, usually at an ATM, a bank teller, or with the convenience checks issuers mail you. It is not the same as a purchase: it is treated as a short-term cash loan with its own fees and a separate, higher-rate balance on your statement.
Why it is so expensive
Three costs stack up. First, a cash advance fee of about 3 to 5 percent of the amount, or a flat minimum. Second, a cash advance APR that is typically higher than your purchase APR. Third, and most important, there is no grace period: interest accrues from the moment you take the cash, so even paying it off at the next statement still costs interest. See how credit card interest works and the grace period guide.
What to do instead
Because the fee and immediate interest stack, a cash advance is one of the worst ways to get money. Better options: a debit withdrawal from your own funds, a 0 percent intro offer for a planned purchase, or for existing debt a balance transfer. If you must take one in an emergency, repay it as fast as possible since interest runs daily. Also avoid cash-like transactions that code as advances, such as some gambling, lottery, and money-order purchases.
Frequently asked questions
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