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A cash advance lets you borrow money against your credit card's line of credit. You can withdraw money at an ATM, through a bank teller or your bank's mobile app, or you can use a convenience cheque. Certain transactions may also be considered as cash advances, including purchasing a money order or sending money through certain apps, buying lottery tickets or foreign currency and gambling.

Your cash advance limit is typically lower than your overall credit card limit. Generally, you can withdraw around 20% - 40% of your credit limit, although the exact amount varies by issuer. You can check your specific cash advance limit by looking at your monthly credit card statement or logging into your issuer's mobile app or online banking portal.

While cash advances might seem a quick and convenient way to access money, they can be expensive. Unlike regular credit card purchases, cash advances typically come with fees and interest charges that hit your account right away, meaning there's no grace period to pay off the balance before costs start adding up. The interest rate for a cash advance is usually much higher than your standard purchase APR, often ranging from 25% to 30% or more. Plus, credit card issuers typically charge a cash advance fee of 3% to 5% of the amount withdrawn (or a flat minimum such as $10).

For example, if your credit limit is $5,000, you may be able to withdraw approximately $1,500. If your issuer charges a cash advance fee of 5%, you would pay a $75 fee on the withdrawal. Interest starts accruing immediately and will generate around $36 over the month at a 29% cash advance APR.

Before taking out a cash advance, consider alternative options that may offer lower costs and more flexible terms. Personal loans, for example, typically come with lower APRs than cash advances and offer fixed repayment terms, making them a potentially more affordable option.

tags : Credit Cards Fees Cash Advance

Disclaimer: This editorial content is not provided or commissioned by the banks or credit card issuer(s). Opinions expressed here are the author's alone, not those of the banks or credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the banks or credit card issuer(s). Reasonable efforts are made to present accurate info, however all info is presented without warranty. Consult with the issuing bank of the card or account for terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are accurate as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.