What Is a Cash Advance on a Credit Card? (2025)

4 Min Read | Published:March 5, 2024

Learn what a cash advance on a credit card is, its advantages, drawbacks, and responsible usage, and when to consider using a cash advance.

What Is a Cash Advance on a Credit Card? (1)

This article contains general information and is not intended to provide information that is specific to American Express products and services. Similar products and services offered by different companies will have different features and you should always read about product details before acquiring any financial product.

At-A-Glance

A credit card cash advance is a convenient option when you need cash right away.

Credit card cash advances can be useful in the right circumstances.

Credit card holders should review the pros and cons before taking a cash advance.

There are different options available to you when you need cash right away. Getting a loan from the bank is one option. Borrowing it from friends or family is another. Another option is to take out a cash advance on your credit card. Cash advances are a convenient and flexible option, but the tradeoff is that you may pay higher fees and interest on the money.

What’s a Cash Advance?

A cash advance on a credit card happens when you withdraw funds from your available credit card balance. They can take the form of an ATM withdrawal, but even other transactions like payments to friends and family can be considered a cash advance as well. This differs from an ATM withdrawal with your debit card because with a cash advance, you’re borrowing the money against your credit line, not taking it from a bank account.

Credit card cash advances can offer a convenient solution when you need cash immediately. However, there are some important considerations that you’ll want to keep in mind. With cash advances, there will typically be fees and higher interest charged as well, so you’ll want to consider carefully whether it’s a good option for you.

Examples of Transactions That Are Considered Cash Advances

Using your credit card to withdraw cash at an ATM is categorized as a credit card cash advance. It’s worth noting that there are other types of transactions that may fall into this category as well. These include (but are not limited to) the following:·

  • Monthly bills paid with a credit card: Credit card issuers may categorize a credit card payment on a monthly bill as a credit card cash advance. That includes auto loans.
  • Lottery Tickets: Credit card issuers may consider lottery tickets a cash advance.
  • P2P payments: Peer-to-peer payments are the transfer of funds from one individual to another. This type of transaction may also be categorized as a cash advance.

These are just a few of the transactions that may fall into this category. Be sure to check with your credit card issuer to see what transactions are classified as cash advances.

Pros and Cons of Credit Card Cash Advances

Cash advances have their pros and cons. The primary advantage is convenience, if you have a credit card that allows a cash advance, then you can gain access to the money right away. The main disadvantage is the cost of doing it. Here’s a look at some of the pros and cons of credit card cash advances:

Pros
Get Cash Fast
Access Via ATM
No New Credit Check Required
Low Minimum Payments
Cons
Cash Advance Fees
High Annual Percentage Rate (APR)
Interest Starts Accumulating Immediately
May Impact Your Credit Score (If the Balance Isn’t Paid on Time)

You’ll also want to consider how the cash advance might impact your credit. If the balance goes unpaid for too long, it may impact your credit score.

What Type of Fees Are Involved With a Cash Advance?

Credit card companies typically charge a fee for credit card cash advances. These fees are typically either a flat rate or a percentage of the cash advance amount. You will typically be charged a higher interest rate for a cash advance as well, and interest may start to accrue right away. Check with your credit card provider for more information. There may also be an ATM surcharge for withdrawing the money at that location. Check your provider’s website to see if there are any ATMs nearby where you can avoid that fee.

Things to Consider Before Taking a Cash Advance

Credit card holders should review their budget before taking a cash advance. It’s also important to evaluate the need for funding. Credit card cash advances may be good to have available when you need emergency funds, but you’ll want to weigh up the pros and cons carefully to make sure there isn’t another, better way to acquire the cash that you need.

Frequently Asked Questions

Different types of transactions may be classified as a cash advance. To get a credit card cash advance from an ATM, simply visit the ATM and take out the money. The maximum sum you can borrow depends on your credit card, which may have a cash advance limit lower than your overall credit limit. Be sure to check with your credit card issuer to learn more, and to make sure it allows cash advances.

Rewards, including points, miles, or cash back are not typically given when you take out a cash advance.1 Check with your credit card issuer for more information.

The Takeaway

Credit card cash advances are a simple way to get cash when you need it fast, but you will typically be charged fees and higher interest rates. You’ll also want to make sure you pay the balance off in full and on time. Review your budget and carefully consider whether this is a good option for you.

What Is a Cash Advance on a Credit Card? (3)

Kevin D. Flynnis a financial services provider, business coach, and financial writer. He lives in Leominster, Massachusetts with his wife Evelyn, two cats, and ten wonderful grandchildren.

All Credit Intelcontent is written by freelance authors and commissioned and paid for by American Express.

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The material made available for you on this website, Credit Intel, is for informational purposes only and intended for U.S. residents and is not intended to provide legal, tax or financial advice. If you have questions, please consult your own professional legal, tax and financial advisors.

What Is a Cash Advance on a Credit Card? (2025)

FAQs

What Is a Cash Advance on a Credit Card? ›

A cash advance is when you use your credit card to withdraw cash against your line of credit. While this is a convenient way to access money quickly, it's often not cost-effective because of high credit card interest rates and cash advance fees.

What is considered cash advance on a credit card? ›

A credit card cash advance is a withdrawal of cash from your credit card account. Essentially, you're borrowing against your credit card to put cash in your pocket. However, there are costs to taking a credit card cash advance and, in some cases, limits on the amount you can withdraw.

What is a normal cash advance limit? ›

Your credit card cash advance limit will typically be lower than your credit limit, with a typical limit falling between 20% to 50% of your total spending limit. For example, if you have a $5,000 credit limit on your card, your cash advance limit will likely be less than $2,500.

Do cash advances hurt your credit? ›

Using your credit card for a cash advance doesn't directly affect your credit score. Your credit report won't show that you used your credit card to get cash. However, the cash advance does increase your credit card balance and could hurt your credit score if it pushes your credit utilization ratio too high.

Should I say yes to cash advance on a credit card? ›

Deciding to get a credit card cash advance is a personal decision. But remember, cash advances typically come with additional fees and higher interest rates than other transactions. And that can make them costly, especially if you can't pay them back promptly.

Is paying a bill considered a cash advance? ›

Paying a bill using a credit card or line of credit is treated the same as getting a cash advance. You'll be charged interest from the time you make the payment, just like you would for a cash advance.

What is an example of a cash advance? ›

Say your card has a $5,000 limit. You might think you could take out 30%, so $1,500. But really the most you could receive is $1,350; the remaining $150 covers the cash advance fee. On top of the cash advance fee, your credit card will charge interest.

What are three reasons why you should avoid cash advances? ›

Key Points:
  • Credit card advances are a very expensive loan.
  • Cash advances start accruing interest immediately.
  • Credit card advances can quickly put you deeper in debt.

How much cash can I withdraw from my credit card? ›

Cash advances are typically capped at a percentage of your card's credit limit. For example, if your credit limit is $15,000 and the card caps your cash advance limit at 30%, your maximum cash advance will be $4,500.

How do I get cash from my credit card without cash advance? ›

Ask your card issuer for convenience checks. These are checks you can write that are tied to your credit card account. Wire money to yourself through a money transfer service, such as Western Union, and pay with your credit card. Purchase a money order with your credit card, if you can find a merchant that allows this.

What is one disadvantage of using a credit card to get a cash advance? ›

Cash Advances Don't Have a Grace Period

Credit card purchases have a grace period in which you'll have about a month to pay back the money you borrowed interest free. However, most cash advances don't have a grace period, and interest will start to accrue the same day you take your advance.

Is it a good idea to get a cash advance? ›

Taking out a cash advance may seem like a good idea in the moment, but it can quickly lead you to rack up debt. We recommend avoiding a cash advance altogether and opting for some alternative options that have better terms. Borrow from family or friends: You can ask family or friends for a loan.

How to withdraw cash from a credit card without fees? ›

While you will not be able to withdraw cash from a cash machine on any credit card fee-free, there are credit cards that allow you to access cash or spend on your card without paying interest. Here's how they work: 0% money transfer cards: Make a payment from your credit card as cash straight into your bank account.

What are four things you could do to avoid cash advances? ›

To avoid using a cash advance in non-emergency situations, it can help to familiarize yourself with other ways to cover expenses.
  • Build your savings. ...
  • Ask about a payment plan. ...
  • Consider a line of credit. ...
  • Apply for a personal loan.
Apr 24, 2024

When it is a good idea to take a cash advance on your credit card? ›

If you must take out a cash advance, it only makes sense to do so when you know you'll have the money to pay it off as fast as you can. Otherwise, the interest piles up with every passing day. The balance might tip in favor of a cash advance if you're using a card with no cash advance fee.

What is the risk of getting a cash advance on a credit card? ›

You'll usually be charged far more for a cash advance than you would if you simply made a purchase of the same value using your credit card. This is because there is generally a higher interest rate for cash advances and additional fees charged.

What transactions count as cash advances? ›

A cash advance is when you use your credit card to access cash rather than goods and services. Transactions that are considered a cash advance include: Withdrawing cash from an ATM or from a store at the point of sale. Transferring money from your credit card account to another account.

What is considered a cash advance on a line of credit? ›

A cash advance is basically a short-term loan offered by your credit card issuer. When you take out a cash advance, you're borrowing money against your card's line of credit.

Is paying rent with a credit card considered a cash advance? ›

A cash advance lets you borrow funds against your credit card's line of credit. Cash advances can come with fees and higher interest rates than typical credit card purchases do. So if you're using a cash advance to withdraw money and cover rent, then yes, the withdrawal would be considered a cash advance.

Are balance transfers considered cash advances? ›

A balance transfer involves transferring debt from an existing credit card to a new or another existing credit card to save on interest charges. A cash advance, on the other hand, is when you use your credit card to get cash either through an ATM or by transferring it to your bank account.

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