What is a credit card cash advance?
A credit card cash advance lets you withdraw money from your credit account at a bank or ATM. While the process is similar to making a withdrawal on your debit card, a cash advance on your credit card is much more expensive.
When you make a credit card cash advance, your issuer is lending you the money. It’s similar to using your credit balance to buy paper money, just as you would with other purchases. You need to repay the cash you withdraw along with additional charges. That’s why it is a good idea to avoid using cash advances unless in an emergency.
The costs of cash advances
If you’re considering taking out a credit card cash advance, make sure you understand all the fees that you may incur. The terms of your account will be outlined in your credit card agreement. You could be subject to the following expenses:
Transaction fees: When making a cash advance at a bank or ATM, the financial institution may charge you for handling the transaction.
Cash advance fees: Your issuer can also charge you for taking out the cash advance. This may be a flat fee per cash advance transaction, or it may be a percentage of the total amount you withdraw. These fees can be as high as 5%.
Interest: While all credit card transactions are subject to APR, interest is often significantly higher for cash advances. There is also no grace period as there is with purchases. This means interest on your cash advance can start accruing from the moment you make the withdrawal.
How can I get a cash advance on credit card?
It’s usually best to avoid relying on credit card cash advances where possible. However, you might use them if you have to make a purchase with cash but only have your credit card with you. They can also be an option if you need paper money but don’t have the funds available in your bank account.
Cash advances can be withdrawn directly from ATMs if your credit card has a PIN. If not, you will need to go into a bank and show ID. Not all banks offer this service, so make sure the branch offers cash advances through your issuer’s payment network. Your issuer will likely cap the amount you can withdraw with a cash advance, typically to a few hundred dollars.
Ways to avoid using a credit card cash advance
Credit card cash advances are an expensive way of acquiring paper money. If there are alternative ways to make a purchase or get your hands on cash, it’ll save on costly fees.
- Use your credit card for purchases: Instead of withdrawing cash from your credit account, you should charge purchases to the card when you can. This will reduce interest and transaction fees. You should also consider whether the purchase is necessary and worth the costs.
- Ask to borrow money: If you need cash and don’t have the funds in your bank account, it’s worth asking friends, family or colleagues to lend it to you. It may be an awkward situation, but it can save you money.
- Set up alerts on your bank account: Some people use credit card cash advances because they don’t have enough funds in their bank account. If this is the case, start monitoring your balance more closely to avoid unexpectedly running low. Many banks offer text and email alerts to notify you when your balance dips below a certain amount.
- Put money aside for emergencies: Unexpected expenses can result in you relying more on your credit card. When your finances are looking healthy, put some funds aside so you won’t have to use cash advances to pay for nasty surprises.
- Make purchases with petty cash: When paying for business expenses with a small business or corporate credit card, never be tempted to withdraw cash. This could violate your company’s policy and may result in you having to cover the fees. Instead, if you need paper money, request to take it from petty cash and fill out an expense form.
Disclaimer: This content is provided for educational purposes only. The information provided is not an offer, and does not describe Brex products or services. Information about Brex products and services is available on the Brex cards page.