How to Get a Cash Advance
Knowing how to get a cash advance with a credit card can increase your lending options.
Contributing Writer at Tally
August 17, 2021
Your credit card allows you to borrow money so you can make purchases. While the most common way to do this is by swiping your card at a register, one other method is a cash advance.
According to the credit bureau Experian, a cash advance is “a short-term loan provided via your credit card.” A cash advance can be useful if your bank account is running low and you need funds fast.
We’re covering how to get a cash advance with a credit card. We’ll also go over whether it’s in your best interest to do so and what other options are available. By the end of this article, you should better understand how to get a cash advance and whether doing so is right for your financial situation.
What is a cash advance?
A cash advance is a service many credit card companies offer to cardholders. If you have a bank account, you typically have to use a debit card to withdraw cash. Like a debit card, a credit card cash advance allows you to pull funds against your credit and use the cash or deposit the funds into your checking account.
You typically cannot pull out more than your current credit limit, though this depends on the lender. Typically, the cash advance limit is just a portion of your card’s credit limit.
For instance, let’s say that you have a $5,000 credit limit. The cash advance limit may be $1,500, only 30% of your credit limit. Some lenders have stricter limits on the amount of cash you can withdraw, not allowing you to take more than a few hundred dollars. You may find your cash advance limit on your statement or reach out to your credit card company to confirm the limit.
Cash advances can be beneficial if you are low on cash and find yourself in a cash-only situation. Perhaps your car broke down, you need it fixed immediately and the mechanic only takes cash.
How to get a cash advance
There are two primary ways that you can get a cash advance on your credit card account. The first is to head to your local bank or ATM.
If you go to the bank, you’ll need to make sure they take your credit card issuer. Common issuers include:
You can give the teller at the bank counter your card and request a cash advance.
Your other option is to go to an ATM. Insert your card just as you would a debit card. From there, follow the on-screen prompts to withdraw the cash.
If you don’t want to get a cash advance through your bank, you can get a convenience check instead. In these cases, your credit card company will issue you a check that draws against your credit line. You can deposit this check into your bank account and use the funds as needed.
Your credit card company may have unique measures in place to handle convenience checks. If you are interested in obtaining one, you should contact your credit card company or financial institution ahead of time to figure out how they issue the checks.
What are some things to consider with a cash advance?
Knowing how to do a cash advance with a credit card can be helpful, especially in a pinch. However, there are some things that you should consider before deciding to use it as a source of income or to meet your financial needs.
No grace period
Cash advance fees and interest rates can be costly. With a typical credit card purchase, you have a grace period for repayment. This repayment is typically around 30 days after you receive your credit card statement. If you repay your total borrowed balance by the due date, you are not charged interest.
However, this is not the case with cash advances. Your credit card issuer charges interest as soon as you withdraw the money (typically, interest starts accruing the next business day).
Just like any other funds you borrow on credit, you are responsible for paying the entirety of the balance. However, that interest begins compounding as soon as you withdraw your funds.
Let’s say, for instance, that you take out $750 as a cash advance. Your cash advance interest rate is 27%. The interest compounds daily. After one month, your balance would grow to $981.29. Your interest charge would be nearly a third of the principal amount.
Additionally, cash advance annual percentage rates are typically much higher than standard APRs. Your credit card agreement will clearly spell out your cash advance APR.
So, not only does your balance begin collecting interest immediately, but it does so at a higher interest rate than your standard credit card purchases. This high rate can quickly increase the total balance owed on your credit card.
Furthermore, there are considerable fees associated with a cash advance. You’ll have to pay initial cash advance fees to take out the funds. Some lenders charge a flat fee of up to $10. Others charge a percentage of the transaction, sometimes up to 5%.
There are also ATM fees or bank transaction fees when you pull the funds. The bank that you use to pull the funds will implement the fees.
For these reasons, you shouldn’t use cash advances for regular purchases. If you put them on credit, you give yourself a grace period to repay the balance without collecting interest. Plus, you can earn rewards like cash back or travel points. You often can’t earn rewards on a cash advance.
Are there alternatives to cash advances?
If you want to avoid the fees associated with cash advances, there are some other alternatives at your disposal. For one, you can look into using an online transfer service like Venmo, PayPal or the Cash App. These apps can transfer funds to a third party using your credit card, similar to a cash advance.
The difference, however, is that your lender likely won’t view these transactions as a cash advance (though it’s worth verifying). The third-party may charge you a transaction fee of around 2% to 3%. However, this fee may be cheaper than the cash advance fees and compounding interest charges.
Another option is to take out a personal loan. You’ll need to have a bit of foresight to plan for the upcoming purchase and open the loan. However, if you have a good credit score, the rates on your personal loan may be better than those on your cash advance. You’ll also have a fixed loan amount and monthly payments, making budgeting easier when repaying the borrowed funds.
Lastly, while this option may take a while, you should work to build an emergency fund. Even having a couple of hundred dollars on hand can reduce the likelihood of borrowing money at a high interest rate. Building a rainy day or emergency fund may take time, but it’s a great financial goal to work toward.
Knowing how to get a cash advance increases your financial options
Understanding how a cash advance works can help you better manage your credit cards. Cash advances may seem tempting because they provide quick, easy access to liquid money. And, getting a cash advance is quite easy — all you need to do is head to your local bank or ATM or request a convenience check from your credit card company.
However, there are some things that you should be aware of. Cash advances come with high interest rates and fees, which you’re charged as soon as the transaction occurs. Other options like personal loans may have better terms and conditions.
If you’re looking to increase your financial flexibility, consider using a credit card payoff app like Tally to help you pay down your debt so you can start saving. While Tally doesn’t give you money upfront, it can help you manage your credit cards easily and efficiently. Doing so can free up cash, potentially reducing the likelihood of you having to rely on a high-interest cash advance.