What Is a Credit Card Cash Advance? Fees, Interest and Alternatives

Independent guide - not affiliated with or endorsed by any card issuer or card network. Cash advance fees, rates and limits are set by each issuer; check your card's pricing table or cardholder agreement for the current terms.

A credit card cash advance is borrowing cash, or something the issuer treats like cash, against your card's credit line. It usually costs more than a normal purchase in three ways: an upfront fee, a separate and often higher APR, and interest that starts on the day of the transaction because the grace period generally does not apply.

Cash advances are easy to take by accident. Buying lottery tickets, foreign currency or casino chips can count as one, and so can some money transfers. This guide explains what counts, what it costs, how it affects your credit and what to use instead. It is based on CFPB guidance and the federal disclosure rules in Regulation Z, not on any one card.

What counts as a cash advance?

The obvious case is taking money out of an ATM with your credit card and PIN. But the category is wider than that. Depending on your issuer's agreement, the following are commonly treated as cash advances or "cash-like" transactions:

• ATM withdrawals and over-the-counter cash at a bank using your credit card.
• Convenience checks the issuer mails you, unless the offer says they are treated as balance transfers.
• Buying gambling chips or placing wagers. The CFPB lists these among cash advance transactions.
• Buying lottery tickets, also listed by the CFPB.
• Buying foreign currency, money orders or traveller's cheques.
• Some person-to-person payments and transfers to prepaid or wallet accounts, depending on how the merchant codes the transaction.

The issuer decides based on the merchant category code the payment arrives with, so the same app can be a purchase on one card and a cash advance on another. Your cardholder agreement lists what your issuer treats as cash-like. If you are unsure, read it before you pay, not after.

What a cash advance costs

The CFPB's model disclosures show the fee written as a minimum dollar amount or a percentage of each advance, whichever is greater. Issuers set their own numbers, which is why we do not quote any here. Your card's pricing table, often called the Schumer box, shows the exact figures and is required by federal law in every application and agreement.

Why interest starts straight away

On purchases, most cards give you a grace period: pay the statement in full by the due date and you pay no interest. The CFPB explains that grace periods typically apply only to purchases. If you use your card for a cash advance, or use a convenience check from your issuer, you generally start paying interest from the date of the transaction. Paying the advance off quickly limits the damage, but the fee is charged up front and is not refunded.

For a full walk-through of daily interest and the average daily balance, see our guide on how credit card interest works.

Your cash advance limit

Most cards set a cash advance limit that is lower than your overall credit limit. It is shown on your statement and in your account online. ATMs and issuers may also set daily withdrawal caps. A cash advance uses the same credit line as your purchases, so it raises your balance and your utilisation just like spending does.

How a cash advance affects your credit score

A cash advance is not reported to the credit bureaus as a separate item. What matters is the balance it adds. A larger balance means higher credit utilisation, which is one of the biggest inputs into most scores. If the advance makes it harder to pay on time, the missed payment would do far more damage than the advance itself.

How payments are applied to a cash advance balance

If your card has both a purchase balance and a cash advance balance at different rates, the CFPB explains that any amount you pay above the minimum generally must go to the highest-rate balance first. That usually means the cash advance. The minimum payment itself can be applied as the issuer chooses. Paying more than the minimum is the fastest way to clear an expensive advance.

Using a credit card at an ATM abroad

Travellers often reach for a credit card at a foreign ATM. That is a cash advance, so the fee, the higher rate and immediate interest can all apply, and a foreign transaction fee and the ATM owner's own fee can sit on top. A debit card with low or no foreign ATM fees is usually the cheaper way to get local cash. When the ATM offers to charge you in your home currency, choose the local currency instead. Our guide to foreign transaction fees covers this in more detail.

Alternatives to a cash advance

• Your debit card or savings. Free to use at your own bank's ATMs.
• Paying the bill directly with the card. Many bills that seem to need cash can be paid as a normal card purchase, which keeps the grace period.
• A payment plan with the biller. Utilities, hospitals and landlords often agree to spread a payment.
• A small personal loan or credit union loan. Usually a fixed rate and fixed term; compare the total cost.
• A 0% purchase APR offer. If you need to spread a large purchase, see our 0% intro APR rankings.

Be very careful with payday loans and other high-cost short-term credit. The CFPB publishes guidance on how they work and what they cost.

If you have already taken a cash advance

1. Check the statement for the fee and the rate applied, and confirm they match your agreement.
2. Pay more than the minimum as soon as you can, since the extra goes to the highest-rate balance first.
3. Turn off cash-like features if your app allows it, or ask the issuer to set the cash advance limit lower.
4. If a purchase was wrongly coded as a cash advance, contact the issuer in writing. Our guide on how to dispute a credit card charge explains your billing error rights.

Sources

• CFPB: What is a grace period for a credit card?
• CFPB data spotlight: credit card cash advance fees and gambling transactions
• Regulation Z, 12 CFR 1026.60: Credit and charge card applications and solicitations
• CFPB: How does my credit card company calculate the amount of interest I owe?
• CFPB: Credit cards key terms