In a NutshellA credit card cash advance fee is what the credit card company charges you to make a cash advance. Most companies charge a flat fee or percentage of the transaction – whichever is greater. You can make the transaction at a bank or ATM, or by cashing checks provided by your credit card company at your local bank.
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Need cash, but only have your credit card?
Normally when you use your credit card to make a purchase, you charge the cost to your line of credit and then pay for your purchases in a statement later. But did you know you can also use your credit card to access cash?
“When you use your credit card to get cash instead of buying something, that’s a cash advance,” says Neal Frankle, Certified Financial Planner™ and the creator of CreditPilgrim.com. You can make the transaction at a bank or ATM, or by cashing checks provided by your credit card company at your local bank.
But this transaction comes at a cost.
“The cash advance fee is what the credit card company charges you to make this advance,” says Frankle.
A credit card cash advance could be costly. On top of repaying the cash you borrowed, you’ll likely pay a high APR on the balance. Before you use your card to get cash, know what the fees look like and understand the alternatives.
How much does a cash advance fee cost?
Credit cards often come with different fees, APRs and terms. It’s critical to read the fine print on the specific card you hold or want to open.
For cash advances, most companies charge a flat fee or percentage of the transaction – whichever is greater. Some banks will vary the amount based on how you access the cash.
But the fee isn’t the only cost associated with cash advances. You’ll pay interest on the transaction, too. This is different than the interest on normal balances because it starts accruing immediately without a grace period.
Here’s a list of popular credit cards and how they charge cash advance fees:
Cash advance costs for popular cards
|Credit card||Cash advance fee||APR on cash advances|
|The Amex EveryDay® Credit Card from American Express||3 percent (minimum $5)||26.24 percent (variable)|
|Chase Sapphire Preferred® Card||5 percent (minimum $10)||25.99 percent (variable)|
|Capital One® Venture® Rewards Credit Card||3 percent (minimum $10)||23.99 percent (variable)|
|BankAmericard® Credit Card||
Direct deposit and check cash advances: either $10 or 3% of the amount of each transaction, whichever is greater.
ATM, over-the-counter, same-day online and cash-equivalent cash advances: either $10 or 5% of the amount of each transaction, whichever is greater.
|Direct deposit and check cash advances: 15.99% to 25.99% (variable), based on your creditworthiness when you open your account
Bank cash advances: 25.99% (variable)
|Discover it® Card||Either $10 or 5% of the amount of each cash advance, whichever is greater.||25.99% (variable)|
Before you apply for a credit card, check out its fees, rates and terms, as they may change based on the Prime Rate. Banks and financial institutions that issue credit cards include copies of the card agreement alongside online applications, so review that document first.
For cards you already own, look at your billing statement or credit card agreement. You should find the same disclosures there. If you have further questions, call your credit card company and speak with a representative.
When a cash advance makes sense — and when it doesn’t
A cash advance can help you get the funds you need to cover an emergency expense that you can’t charge to your credit card. “The only pro of a cash advance is that it provides fast access to cash,” Frankle says. “The downsides include the upfront fee plus the high interest rate you’ll pay on that advance if you can’t repay it right away.”
A cash advance can get you out of a tight financial spot if there are no alternatives, but it’s best to plan ahead to avoid taking one. The high total cost tends to outweigh any benefit.
How to avoid getting hit with a cash advance fee
Want fast access to cash without the fees? Smaller institutions may provide solutions.
Consider getting a card from one of the following credit unions:
- PenFed Credit Union
- American 1 Credit Union
- CapEd Federal Credit Union
All offer a number of card options that don’t charge a fee for making cash advances. Each credit union does require you to join first, but that’s easy to do.
You need to buy a $3 membership to American 1’s Community 1 Cooperative to be eligible to join American 1 and access their credit card offerings. And you can become a credit union member with CapEd Federal by donating $20 to the Idaho CapEd Foundation.
“The best way to avoid a cash advance fee is to simply not take out a cash advance from a credit card company,” adds Frankle.
He suggests asking if the person or company you need to pay will accept the credit card itself as a form of payment or not making the purchase at all if it’s an option.
If you need the cash, look to other sources first. You may need to reduce another line item in your budget for this month to free up cash flow or tap into your emergency fund to cover an unexpected cost.
Or, if you’re looking for a back-up plan, try carrying a small amount of cash for emergency situations. That way you’ll have cash if you need it and will avoid any fees to get it.
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