When and How to Take a Cash Advance on a Credit Card

Taking out a cash advance on your credit card usually comes with a higher than average APR penalty. If you’re getting ready to swipe for cash, hold that thought until you read this blog.

A cash advance is a way to get cash from your available credit. You can think of it as a short-term cash loan. Cash advances work like any other purchase that you make with your credit card, with the company basically lending you the money and charging your account for it.

The cash advance option can offer much-needed convenience, but it comes at a cost. This article aims to cover how and when to take a cash advance on a credit card.

How do you get a cash advance?

If your credit card has a PIN, you can get a cash advance from an ATM. If you do not have a PIN, you can contact your card issuer and set one up. Otherwise, you can find a bank that offers cash advances through your card issuer, and you can get your cash that way. Just be prepared to show ID.

When should you get a cash advance?

If you rely on your credit card for the bulk of your day-to-day spending, you could find yourself in trouble when presented with a cash-only situation. As such, there are some instances where you need cash immediately. For example, you could find yourself at a cash-only barber shop, food truck, or mom-and-pop store.

What are the drawbacks of a cash advance?

Unfortunately, cash advances often come with a transaction fee and a higher annual percentage rate (APR). You can view the cost of a cash advance below:

  • Cash advance fee. These fees are assessed by your credit card issuer. Some issuers charge a flat fee usually from $5 to $10. Other issuers charge a percentage of the amount of the cash advance.
  • Bank fee. These fees are assessed by the ATM or bank that you use for your cash advance.
  • Interest. The interest rate is typically higher for cash advances, and interest begins accruing at the time of withdrawal.

Also, the amount you can receive through a cash advance is often less than your available credit. Most issuers only allow a few hundred dollars to be advanced at one time. Consult your credit card agreement to determine the rules and fees that apply to you.

Cash advances enable you to get cash fast. You can use your credit card to get cash immediately from an ATM or bank. Cash advances can be a lifesaver when you find yourself in a pinch, especially when cash is your only option. However, cash advances are costly, and your issuer usually limits the amount you can take. You should only consider a cash advance when it is necessary. Otherwise, consider borrowing money from friends, family, or a bank. These alternative options can be cheaper and serve as better long-term solutions to your money shortage.

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