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Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. SHARE: zamrznutitonovi/Getty Images March 08, 2022 Checkmark Bankrate logo How is this page expert verified? At Bankrate, we take the accuracy of our content seriously. "Expert verified" means that our Financial Review Board thoroughly evaluated the article for accuracy and clarity. The Review Board comprises a panel of financial experts whose objective is to ensure that our content is always objective and balanced. Their reviews hold us accountable for publishing high-quality and trustworthy content. Tim is a freelance personal finance writer and blogger with a particular focus on credit cards and consumer lending. In 2002, he stumbled upon a copy of "The Millionaire Next Door," by Thomas J. Stanley and William D. Danko, which ignited a passion for learning and sharing fact-based money principles. Tim has a passion for demystifying personal finance and helping people live their best lives. Cathleen's stories on design, travel and business have appeared in dozens of publications including the Washington Post, Town & Country, Wall Street Journal, Marie Claire, Fodor’s Travel, Departures and The Writer. Bankrate logo The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. The content on this page is accurate as of the posting date; however, some of the offers mentioned may have expired. Terms apply to the offers listed on this page. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer. Bankrate logo The Bankrate promise
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A cash advance is essentially a cash loan from your credit card, with a maximum amount equal to your available credit. You may only be able to borrow up to your card’s cash advance limit which will vary depending on the issuer. To find your card’s exact cash advance interest rate, call your issuer or review the terms and conditions found in the . Typically, you get a cash advance from an ATM or through a bank that works with your credit card’s payment network (Visa, Mastercard, American Express or Discover). When you take out a cash advance, the amount will be added to your balance and it will begin to accrue interest right off the bat. Why cash advances are expensive
While getting a cash advance is easy, it’s also quite expensive. Consider these factors which drive up the cost of a cash advance: Transaction fees
No matter how you take out a cash advance, you will have to pay a transaction fee, typically 3 percent to 5 percent. Currently, the transaction fee for is 5 percent or $10, whichever is higher. That means if you take out a cash advance for $300, the transaction fee will run you $15. Incidentally, the transaction fee is identical for three other Higher APR
The for credit card cash advances tends to be substantially higher than the APR for regular purchases. Consider this: The is hovering around 16 percent. While your card’s APR for regular purchases may be higher or lower, one thing is certain: the is considerably higher. Before you get a cash advance, do your due diligence and run the numbers to understand your actual cost. No grace period
Many responsible cardholders are surprised to learn that credit card companies do not allow a for cash advances as they do for regular purchases. Instead, interest begins to mount the moment you take a cash advance. How to get a cash advance from a credit card
To establish the cash advance option on your credit card, call your card issuer’s customer service department and get a PIN. You can then visit an ATM and use your card and PIN, just like a debit card, to get cash. The only difference at the ATM is you’ll select the cash advance option rather than choosing your savings or checking account. You’ll then enter the amount of cash you wish to withdraw. Of course, you won’t be able to access more than your available credit line. In fact, credit card companies typically limit your daily cash advance amount to a few hundred dollars. In other words, if you need more than a few hundred dollars to address an emergency, a cash advance may not be a reliable option. How to minimize the cost of a credit card cash advance
While transaction fees and high-interest rates spike the costs of a credit card cash advance, you still may want to consider one as a last-resort option to address an emergency financial situation. In that case, it’s helpful to understand how to limit the costs of a cash advance. Borrow as little as possible
The ideal way to minimize cash advance costs is to borrow only the absolute minimum you need. The smaller your cash advance amount, the less you’ll have to pay in fees and interest. Remember, a cash advance is simply a loan from a bank. The best way to accelerate the process is to avoid taking out a considerable amount, to begin with. Pay off your cash advance as fast as you can
Since your advance begins accruing interest the same day you get your cash, start repaying the amount you borrow as soon as possible. If you take out a $200 cash advance, aim to pay that amount in full—or as much as possible—on top of your minimum payment. Make it a goal to repay the amount in days instead of weeks. And don’t even consider months. At 25 percent APR, a $1,000 cash advance will accrue interest of about 70 cents a day. If you can pay it off within a few weeks, the interest won’t have time to add up too much. But as time goes on, so will the mounting interest. should show you the different interest rates for your purchases, cash advances and balance transfers. Thankfully, the requires credit card companies to apply payments made in excess of the minimum amount due to balances with the highest interest rates. Before the passing of this important consumer protection legislation, it had been common practice to apply payments over the minimum monthly amount to the lowest interest balances first, thereby extending the time necessary to repay higher interest rate balances. How much does a cash advance cost
You can use to see the total cost of a cash advance as well as how different repayment strategies can change how much you’ll have to pay. Let’s say you take out a $500 cash advance at 25 percent APR and pay a minimum payment of $15 each month. You’d pay that amount for 58 months (almost five years!) before the balance was paid in full. You would also pay $362 in interest, plus a $25 cash advance fee (5 percent) and an ATM fee, likely $3 or more. So, in order to borrow $500, you would end up paying an additional $390. That means the convenience of a cash advance would cost you 78 percent more than the original borrowed amount of $500 if you only pay the minimum payment. Doubling your monthly payment to $30 a month would have you paying off your debt in 21 months with $120 in total interest (24 percent more than the amount borrowed), while tripling it to $45 a month would take just 13 months and you’d only pay an additional $75 in interest (15 percent more). This example highlights the importance of paying more than the minimum amount in order to minimize the cost of a cash advance. You can significantly reduce interest charges and your repayment timeline if you can make sizable payments over the minimum amount. If you are unable to pay more than the minimum, it may be best to save your money and avoid getting a cash advance. When to take out a cash advance
You may find yourself in a situation where a cash advance on your credit card seems like the best option because it is, well, quick. And while that’s true, try to only consider a cash advance as a last resort. The hole you could potentially find yourself in isn’t worth the hassle if there are other options to consider. If a cash advance is your only solution to getting cash out in a hurry, make sure you are aware of all the costs involved and develop a plan to pay it off. Try to only borrow what you actually need because the less money you take out, the less interest you will have to pay. Alternatives to a credit card cash advance
Before you turn to a costly cash advance, consider these options to meet your needs and save money. Request an extension
Instead of getting a cash advance to pay a bill, you may be able to get your creditor to extend or change your due date. You may even be able to work out a payment plan to catch up on your account without affecting your credit. Many creditors even allow their customers to pause their accounts for an agreed number of weeks or months due to financial hardship. It doesn’t hurt to talk to your creditors to discuss your options. You may just gain the flexibility you need to or emergency. Friends and family
While borrowing money from a friend or family member can be a more flexible and less expensive option, this arrangement also carries the potential to damage your relationship with the person who agrees to loan you money. If you pursue this path, make sure you and the other person set clear terms before you accept any money. Personal loan
Unless you have good credit, a could be an expensive option with high interest rates. Still, the interest rates and terms are typically much more favorable than a cash advance. The bottom line
A cash advance should be a last resort because of its high interest, transaction fees and other factors. Consider other alternatives such as asking for an extension, getting a personal loan or seeking assistance from a friend or family member. If you have few options and your best bet is to get a cash advance, you can minimize the financial impact by only withdrawing a small amount and repaying the balance as fast as possible. SHARE: Tim is a freelance personal finance writer and blogger with a particular focus on credit cards and consumer lending. In 2002, he stumbled upon a copy of "The Millionaire Next Door," by Thomas J. Stanley and William D. Danko, which ignited a passion for learning and sharing fact-based money principles. Tim has a passion for demystifying personal finance and helping people live their best lives. Cathleen's stories on design, travel and business have appeared in dozens of publications including the Washington Post, Town & Country, Wall Street Journal, Marie Claire, Fodor’s Travel, Departures and The Writer. Related Articles