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Cash Advances: How They Work and What They Cost

A cash advance is an expensive way to access funds in a pinch -- here's what you need to know.

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If you’re in need of some fast cash, a cash advance might’ve crossed your mind. While an advance on your credit line can give you access to fast funds, it could also lead to a high interest charge and an up-front fee.

Cash advances have a higher interest rate -- typically 24.99% to 29.99% -- than a card’s standard APR -- just over 20%. So if you’re unable to pay it back quickly, you might end up worse off than before you took an advance.

What is a cash advance and how do they work?

A cash advance is pretty much a short-term loan you can tap into through your credit card. Instead of getting a loan through a bank or online lender, you’re borrowing against your credit line. 

The credit line for a cash advance is usually lower than your credit line for standard purchases, and the APR is typically much higher.

Interest usually starts accruing right away with no grace period -- meaning the time between the end of your billing cycle and when your next payment is due. 

You can withdraw a cash advance from an ATM. Alternatively, you can go to a bank and show your credit card or a blank convenience check from your credit card issuer -- you don’t need to be a bank customer, but your credit card does need to be in the same network as the bank (Visa or Mastercard, typically).

The cash advance will show up on your credit card statement. And just like with standard purchases you put on your card, you’ll make monthly payments until the balance is paid off. 

Here’s how much a cash advance could cost you

Interest isn’t the only charge to worry about with cash advances -- expect to find a few other fees tacked on. 

First, there’s usually a cash advance fee, which is typically 5% (or $10, whichever is greater) of the amount you’re withdrawing, according to Experian. For example, if your cash advance is $200, expect to dole out $10 in fees. If your cash advance is $400, you can anticipate paying $20. 

Another common fee that you might get charged is an ATM fee. These fees typically range from $3 to $7.

So how much will you actually pay?

Say you request a cash advance of $600 with a 24.99% APR -- not even the highest it could be -- and you take that money out of an ATM. 

The cash advance fee alone could be up to $30. Plus, there’s an ATM fee of $3.50. On Day 1, you’re already up to $33.50 in fees.

Folding in interest charges, if you pay back that cash advance in 30 days, you’ll be paying $12 in interest, which brings the cost of your cash advance to $45.50. 

If it ends up taking 60 days to pay off the loan, your total interest becomes $19, bringing the grand total to $52.50. If it takes you six months to pay off the balance, the total cost of the loan could be as much as $77.50 on top of the principal.

It’s in your best interest to pay off the balance on your cash advance as soon as you can. Otherwise, you could end up drowning in interest fees. 

Risks of cash advances 

The main risks when taking out a cash advance are:

  • High interest charges
  • Numerous fees
  • Damaged credit if you can’t pay it back 

Should it take you a while to pay off your balance, it could cost you a pretty penny in interest fees alone, not to mention any other fees added on to them.

If you’re already carrying a credit card balance and can’t pay off your cash advance right away, it’ll make it that much harder for you to pay off your cash advance in a reasonable amount of time. That means this short-term solution could end up costing you significantly in the long run. 

Does it ever make sense to take a cash advance?

While a cash advance can be quite expensive and do more financial harm than good, there are a few times when it might be unavoidable:

  • If you can’t qualify for a personal loan: If your credit history is a bit bumpy, you might not have access to other types of financing, such as a personal loan. That’s because personal loans usually require good credit. 
  • If you don’t have time to shop around: Other financing options may require time to get approval, so if you need that money as soon as possible, a cash advance might be your only option. You won’t need to apply for a new credit card or loan, and you can get the money through an ATM.
  • If you can pay it right away: If you have a very temporary shortfall of cash, a cash advance means you can count on having money in the very near future, so long as you can pay off the balance in full quickly.

Alternatives to cash advances

Cash advances are an expensive solution to a tricky problem. If you can, consider these alternatives.

Personal loan

If you have good credit and a stable income, you could qualify for a personal loan

Some personal loans allow you to borrow a minimum of $1,000 and grant you access to the funds quickly after your application is approved. 

However, when applying, the lender will do a hard pull of your credit. While personal loans are unsecured (you don’t need to offer collateral to back it up), you may need a good credit score to get approved.

Early direct deposit

Plenty of financial service platforms offer the feature to have a portion of your paycheck deposited a few days early without any fees or interest. You typically have to set up a direct deposit with a minimum monthly amount to qualify. 

Depending on the platform and your eligibility, the sum is typically capped at $150 or $200. Once payday rolls around, the advance you received is taken out of your paycheck. 

Fee-free cash advance

Similar to early direct deposit, a handful of money apps and online financial platforms offer the option to receive a small cash advance. The advance is typically capped at a lower amount, but some are fee-free with no interest.

You’ll typically have to subscribe to the service or have an account with the bank. The timeline for repayment is usually whenever you receive your next paycheck, but in some cases, you may get as much as four weeks to repay what you borrowed.

Fees may range from as low as $0 to $20, but the amount you can borrow is usually capped around a few hundred dollars. 

Asking friends and family 

If you have a good friend or trusted family member who can afford to let you borrow some money, it might be worth asking them for help. 

Just tread carefully. Be sure to spell out the loan terms and expectations of repayment before you accept the money. Otherwise, you could risk damaging a relationship.


The biggest difference between a cash advance and a payday loan is that you’ll need to go through an online payday lender or set foot inside a payday lender location to get a payday loan. While the interest rate of a cash advance is higher than your standard credit card APR, the interest rate on a payday loan is staggeringly high -- as much as 400% or higher. You’re also required to pay back that money quickly, usually within two weeks.

Another difference between the two is that, while the rates and terms of a cash advance are dictated by the credit card issuer, there may be state rules regarding the maximum payday loan amounts, fees and costs.

Cash advances can hurt your credit if you don’t keep up with the minimum payments. Just as late payments on credit card purchases can ding your credit, so can falling behind on your cash advance payments.

Cash advances also increase your credit usage, or what’s known as your credit utilization ratio. This is how much of your limit you’ve used against your credit limit on all your cards. Generally, you should aim to keep the max on your credit usage to 30% and a cash advance may raise this ratio, potentially lowering your credit score.

The average APR on cash advances is 24.99% to 29.99%. Some cards offer a single APR on cash advances, while others offer a range depending on your creditworthiness.

First published on Aug. 26, 2021 at 7:00 a.m. PT.

The editorial content on this page is based solely on objective, independent assessments by our writers and is not influenced by advertising or partnerships. It has not been provided or commissioned by any third party. However, we may receive compensation when you click on links to products or services offered by our partners.

Jackie Lam is a contributor for CNET Money. A personal finance writer for over 8 years, she covers money management, insurance, investing, banking and personal stories. An AFC® accredited financial coach, she is passionate about helping freelance creatives design money systems on irregular income, gain greater awareness of their money narratives and overcome mental and emotional blocks. She is the 2022 recipient of Money Management International's Financial Literacy and Education in Communities (FLEC) Award and a two-time Plutus Awards nominee for Best Freelancer in Personal Finance Media. She lives in Los Angeles where she spends her free time swimming, drumming and daydreaming about stickers.
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