Cash advance

Borrowing cash against your credit card’s limit, usually with an upfront fee, a higher APR and interest that starts right away.

What it means

A cash advance lets you withdraw cash at an ATM or bank, or use a convenience check, against your credit card. It is one of the most expensive ways to borrow on a card. Typical costs include a fee, often a percentage of the amount with a minimum, and an APR that is usually higher than the purchase APR.

Unlike purchases, cash advances generally have no grace period, so interest builds from the day you take the money. Some transactions, such as buying certain gift cards or money orders, may also be treated as cash advances. Many cards also set a lower cash advance limit than the overall credit limit.

Example

Suppose someone takes a $500 cash advance with a 5% fee and a 28% APR. The fee is $25, and about 30 days of interest adds roughly $11.50, so after one month they owe around $536.50.

How it’s used

Emergency cash when no other option is available
Paying a merchant that does not accept cards
Recognizing transactions that may be coded as cash advances

Strengths and weaknesses

Strengths

Fast access to cash
No separate loan application

Weaknesses

Upfront fees plus a high APR
No grace period, so interest starts immediately
Raises utilization and can strain repayment

Good to know

Compare the cost with a personal loan, an emergency fund or a payment plan before using one.

Educational information only, not financial, tax or legal advice. Rules, limits and rates change; check the IRS, your lender or plan, or a qualified professional before acting.