Credit Card Cash Advance: What is It, and Should You Get One?

Most people use their credit cards for everyday purchases, whether online, at stores, or restaurants. But did you know your credit card can also give you quick access to money? That’s called a credit card cash advance, and it works similarly to withdrawing cash from an ATM — but with a few key differences. 

While it’s a fast and easy way to get money when you need it, a credit card cash advance often comes with high fees and interest. Before deciding if it’s the right option for you, let’s take a closer look at how credit card cash advances work, what one might cost, and whether there are better alternatives. 

What is a credit card cash advance? 

A credit card cash advance is when you withdraw money from your credit limit. You can do this at ATMs, banks, credit unions, and even some convenience stores. Certain credit card companies even allow you to perform a cash advance credit card transaction online by transferring money from your credit account to your bank account.

While this might sound similar to using your debit card, it isn’t the same. With a debit card, you’re withdrawing your own money; with a credit card cash advance, you’re borrowing against your credit from the credit card company. As such, you’ll need to pay back what you borrow, plus interest and fees, which start accumulating right away. 

How to get a credit card cash advance

To get a credit card cash advance, follow these steps.

1. Read your credit card agreement: Before you take out a credit card cash advance, take a look at your credit card agreement. Find out whether cash advances are allowed. If they are, familiarize yourself with their fees and interest rate.
2. Understand how much cash you can withdraw: Many credit card companies cap how much cash you can withdraw with a credit card cash advance. It’s typically a percentage of your credit card limit.
3. Choose your method: In general, there are three ways you can take out a credit card cash advance. Depending on what your credit card issuer allows, you may withdraw cash at an ATM, withdraw cash from your card at one of your bank’s locations, or use a cash advance convenience check.

Other types of Cash Advances 

In addition to a credit card cash advance, there are other ways to get quick access to money when you need it. 

• Cash Advance loans. These are also known as Payday Loans and allow you to borrow small amounts. They’re designed to be repaid by your next payday and don’t require good credit. 

What to consider when getting a cash advance on a credit card 

Most credit card companies offer credit card cash advances to qualified cardholders with available credit, but the fees and terms can vary widely. 

Fees 

No matter which credit card company you use, you’ll have to pay cash advance fees. You may be charged a percentage of the amount you borrow (typically between 3% and 5%), a flat fee, or a combination of both. 

Interest rates 

On top of fees, you’ll also be charged interest on the amount you borrow. While credit cards typically carry high rates, what makes cash advances different is that the interest starts piling up the moment you withdraw the money. There’s no grace period like with regular purchases. 

That’s why it’s important to compare your options and look for lenders with the lowest possible rates before taking out a credit card cash advance. 

Credit score impact 

Taking out a credit card cash advance can affect your credit score. Companies report these advances to credit bureaus, so if you don’t pay back what you owe on time, your credit score could take a hit. 

To protect your credit history, it’s best to only take out a credit card cash advance if you're confident you can pay it back by the due date. That way, you can avoid any long-term impact on your credit score. 

Promotions and deals 

Occasionally, credit card companies offer special promotions on cash advances. You might see offers with no fees or lower interest rates than usual. If you come across one of these deals, it could be a good way to secure an advance that’s more affordable than normal. 

Just be sure to read the fine print so you know exactly what you're signing up for! 

Repayment terms 

When you take out a credit card cash advance, you’ll have a set time to pay it back before late fees or penalties kick in. The repayment terms can vary depending on the credit card company, so it’s important to check the terms carefully. Look for repayment conditions that are favorable to your situation to avoid any unexpected costs. 

Google reviews 

Before taking out any type of personal loan, it’s always a good idea to read reviews on Trustpilot, Google, or other review sites. Reviews can provide insight into how much you’ll pay in total for the cash advance and whether the credit card company would be flexible with late payments. Hearing from other customers can help you make a more informed decision. 

Pros and cons of a credit card cash advance 

Pros 

• No credit check. Credit card cash advances are available to those who have already been approved for the credit card. As such, your credit card company won’t perform any additional credit checks. 
• Instant cash. Since it’s common to take out a credit card cash advance directly from an ATM, you could receive your money right away. 
• Readily available. Credit card cash advances are widely available. You can get one at most ATMs, banks, credit unions, or even convenience stores, making it convenient no matter where you are. 

Cons 

• Low borrowing limits. Credit card cash advances typically only allow you to borrow a small percentage of your credit limit, usually 20% to 50%. 
• High interest rates and fees. Credit card cash advances tend to come with higher fees and interest rates. You’ll pay a fee when you take out the advance and you’ll need to repay the loan plus interest. 
• Instant interest accumulation. Unlike other loans that might offer a grace period, interest on a credit card cash advance starts accumulating immediately. To avoid hefty interest, it’s best to pay it back as soon as possible. 
• Potential credit score impact. While you don’t need a good credit score to get a credit card cash advance, failing to repay it on time can negatively impact your credit. 

➢RELATED: What Factors Affect Your Credit Score?

Alternatives to a credit card cash advance 

Cash Advances 

Even though they share the same name, Cash Advances from direct lenders are quite different from a credit card cash advance. These are often referred to as Payday Loans and can be a good option when you need a small amount of money quickly. 

A Cash Advance loan is typically no more than a few hundred dollars because you repay it in full on your next payday. The great thing is, they don’t require a good credit score, and you can apply either online or in person — whichever works best for you. 

➢RELATED: Cash Advances for Bad Credit

Installment Loans 

If you need more than a Cash Advance offers, an Installment Loan from a direct lender could be a better fit. These loans typically range from a few thousand to tens of thousands of dollars, giving you access to more funds. Plus, you can apply for them online or in person, depending on what’s easiest for you. 

Just like with Cash Advances, you don’t need a great credit score to qualify for an Installment Loan. The biggest difference is that you can choose to repay the loan in a lump sum or spread out the payments over monthly installments, which can make managing your budget easier. 

Lines of Credit 

A Line of Credit works a lot like a credit card. It gives you ongoing access to a set amount of funds, and you can borrow as much as you need, up to your credit limit. The best part? You only pay interest on the amount you borrow, not on the whole credit line. 

With the ability to apply online or in-store, a Line of Credit is a flexible and convenient option when you need access to funds on an ongoing basis. 

Title loans 

If you own a car, a title loan could be a good option because you use your car as collateral. A loan representative will assess your vehicle’s value and offer you a loan amount that’s usually between 20% and 50% of its total value. 

The good news is, you can keep driving your car while paying off the loan, and once it’s fully repaid, you’ll get your title back. Just keep in mind that if you default on the loan, the lender has the right to take your car to cover their losses. 

Pawn shop loans 

A pawn shop loan is another option if you have something valuable to use as collateral. You can visit your local pawn shop, and they’ll give you a loan based on the value of the item you offer. 

Once you’ve repaid what you borrowed, plus interest, you’ll get your item back. But be aware that if you can’t repay the loan, the pawn shop will keep your item to cover the cost. 

➢RELATED: How Do Pawn Shop Loans Work?

Is a credit card cash advance right for me? 

A credit card cash advance can be a quick and easy way to get money when you’re in a pinch. The downside is that the fees, rates, and accumulating interest can make it an expensive option, so it’s best to use it only when necessary. 

If you need money fast but want to avoid the costs of a credit card cash advance, you have other options. Consider a Payday Loan, Installment Loan, or Line of Credit from Advance America. Apply online or in-store to get the money you need today.