Credit card cash advances: how they work and what they cost

How does a credit card cash advance work?

You take cash against your card's credit line, usually at an ATM. It comes out of a cash advance limit that's often lower than your overall limit.

The CFPB says you can withdraw cash from an ATM with a credit card, but it's expensive ^[1]. If a withdrawal is declined, you may have hit your cash advance limit, which is usually lower than your full credit limit ^[1]. Your card terms, your latest statement or the number on the back of the card will tell you the limit, the fee and the rate ^[1].

Regulation Z treats "any fee imposed for an extension of credit in the form of cash or its equivalent" as its own line in the card's pricing table ^[3], so the cost is printed before you ever use it.

How much does a cash advance cost?

A fee, either flat or a percentage of the cash, plus any ATM fee, plus interest from the first day, usually at a higher rate than purchases.

The CFPB says card companies may charge a flat fee or a percentage of the advance, and you may pay extra ATM fees on top ^[1]. The interest rate is commonly higher than the rate on purchases, and your statement shows the current cash advance rate ^[1].

Example: you take $300 from an ATM on a card that charges a 5% cash advance fee. The fee alone is $15. The ATM may add its own charge, and interest starts the same day. The real fee and rate for your card are in its pricing table.

Do cash advances have a grace period?

Usually not. Interest on a cash advance starts as soon as you withdraw the money, even if you pay your card in full every month.

A grace period is the stretch between the end of a billing cycle and the due date when paying in full avoids interest on purchases ^[2]. The CFPB says cash advances and checks from your issuer usually accrue interest from the transaction date ^[2], and that interest on a cash advance starts as soon as you withdraw the money ^[1].

That's what catches people out. Paying the statement in full stops interest on purchases, but the cash advance has been building interest since the day you took it. How the daily math works is in how credit card interest works.

Are credit card convenience checks a cash advance?

They're priced like one. The CFPB says checks from your card issuer usually charge interest from the transaction date, just as cash advances do.

Issuers sometimes mail blank checks that draw on your credit line. The CFPB groups them with cash advances: both usually accrue interest from the transaction date rather than getting a grace period ^[2]. Read the terms that came with the checks before you write one, since the fee and rate are set there.

Does a cash advance hurt your credit score?

It can, through your balance. The cash adds to what you owe on the card, and amounts owed make up 30% of a FICO Score.

myFICO lists amounts owed at 30% of a FICO Score and payment history at 35% ^[4]. A cash advance raises your balance, so it raises your utilization until you pay it down. Run your numbers in the credit utilization calculator.

What are the alternatives to a credit card cash advance?

Pay with the card directly if the seller takes cards, use money from your bank account, or ask the creditor you owe for more time.

• Pay the bill with the card itself if the seller accepts cards. A purchase usually keeps the purchase rate and grace period ^[2].
• Use a debit card or your bank account. That avoids a cash advance fee and card interest.
• Ask the company you owe for a payment plan. The CFPB's advice for card bills you can't pay is to contact the creditor early and say what you can afford ^[5].
• Talk to a nonprofit credit counselor. The CFPB notes many credit counseling organizations are nonprofits, and says to ask about fees first ^[5].