What a cash advance is and how it works
A cash advance is money you borrow against your credit card or paycheck, and you repay it with interest and fees. The lender gives you cash when ready — either at an ATM, through a bank teller, or directly into your account — but the cost is higher than a regular purchase. You start paying interest the moment you take the money, with no grace period like you get on credit card purchases.
Cash advances come in two main forms: credit card cash advances (borrowed against your credit limit) and paycheck advances (borrowed against your next paycheck). Each has different costs, repayment terms, and places where you can get one. The choice depends on what you have access to and how quickly you need the money.
Key Takeaways
- Credit card cash advances charge interest when ready with no grace period, plus an upfront fee that is usually 3 to 5 percent of the amount you borrow.
- Paycheck advances are offered by some employers, credit unions, and online lenders, and typically cost less than credit card advances but must be repaid from your next paycheck.
- The interest rate on a credit card cash advance is often higher than the rate on purchases, sometimes 25 percent or more depending on your card and credit history.
- You can get a credit card cash advance at most ATMs, bank branches, or through a balance transfer, but paycheck advances require you to work with your employer or a specific lender.
Getting a cash advance from your credit card
If you have a credit card, you can take a cash advance at any ATM that displays your card's logo, at a bank branch, or by requesting a balance transfer check. At an ATM, insert your card, select "cash advance" or "withdrawal," and enter the amount up to your available credit limit. The ATM will dispense cash and charge you a fee on the spot — this is separate from the interest you will owe.
At a bank branch, you can ask a teller for a cash advance and they will process it the same way. Some credit card issuers also send balance transfer checks in the mail; you can write one to yourself and deposit it into your bank account, though this counts as a cash advance and carries the same fees and interest.
Before you take a cash advance, check your card's terms for the exact fee percentage and interest rate. Most cards charge a flat fee (often $5 to $10) or a percentage of the amount (usually 3 to 5 percent), whichever is higher. Interest begins accruing when ready at a rate that is typically 2 to 5 percentage points higher than your purchase rate. If your card charges 18 percent on purchases, the cash advance rate might be 23 percent.
Paycheck advances from your employer or a lender
Some employers offer paycheck advances directly to employees, allowing you to borrow against wages you have already earned. Ask your HR or payroll department whether this option exists at your workplace. If it does, the process is usually straightforward: you request the advance, it is deducted from your next paycheck, and there may be a small fee or no fee at all.
If your employer does not offer advances, credit unions sometimes do. If you are a member of a credit union, contact them to ask about paycheck advance programs. Credit unions typically charge lower fees than online lenders or credit cards — sometimes $10 to $20 for an advance of a few hundred dollars.
Online lenders and apps also offer paycheck advances, though these come with higher costs and more risk. These lenders typically charge $15 to $30 per $100 borrowed, which works out to an annual interest rate of 400 percent or more. They also require access to your bank account and may take multiple repayments automatically. Use these only if you have no other option and understand the full cost before you proceed.
How much you can borrow and how fast you get it
With a credit card cash advance, you can borrow up to your available credit limit, but most cards set a lower limit for cash advances specifically. For example, if your credit limit is $5,000, your cash advance limit might be $1,500. Check your card's terms or call the issuer to find out your specific limit.
Paycheck advances are usually capped at a percentage of your gross paycheck — often 50 percent of what you earn in a pay period. If you earn $2,000 per paycheck, you might be able to borrow up to $1,000. Employer programs and credit unions will tell you their limit when you ask.
Credit card cash advances are available when ready at an ATM or within one business day at a bank branch. Paycheck advances from your employer are usually processed within one business day. Online lenders vary; some deposit money the same day, while others take one to three business days. Balance transfer checks take 7 to 10 business days to clear.
The real cost: fees and interest you will pay
A credit card cash advance of $500 with a 5 percent fee ($25) and a 25 percent interest rate costs you $25 upfront. If you repay it in one month, you owe about $10 in interest, for a total of $35. If you carry it for three months, interest alone reaches $30, and you have paid $55 total. The longer you carry the balance, the more you pay.
A paycheck advance of $500 from an online lender charging $20 per $100 borrowed costs you $100 upfront. If you repay it in two weeks (one pay period), that $100 fee is your only cost. But if the lender rolls the advance into the next pay period because you cannot repay it all at once, you pay another $100 fee, and the cost doubles.
An employer or credit union paycheck advance of $500 with a $15 fee costs you just $15 if you repay it in one pay period. This is why employer and credit union advances are cheaper — they have lower fees and no interest.
Repaying a cash advance and what happens if you cannot
Credit card cash advances are repaid like any other credit card balance. You make a monthly payment (at least the minimum required by your card), and the balance sits on your account accruing interest until it is paid off. Your payment goes toward the cash advance first, before any new purchases, so the advance does not disappear until you pay it in full.
Paycheck advances are repaid automatically from your next paycheck. Your employer or lender deducts the amount owed, and the debt is settled. If you cannot repay the full amount, some lenders will split it across multiple paychecks, but this triggers additional fees each time.
If you cannot repay a credit card cash advance, it becomes part of your credit card debt. Missing payments damages your credit score and can lead to late fees, higher interest rates, and eventually a collection account. If you cannot repay a paycheck advance, your employer may stop offering them, and online lenders may pursue collection or take legal action.
Alternatives to a cash advance
Before taking a cash advance, consider whether a personal loan, a line of credit, or a payment plan with a creditor might cost less. A personal loan from a bank or credit union typically charges 6 to 36 percent interest with no upfront fee, and you have a set repayment schedule. This is often cheaper than a credit card cash advance, especially if you need more than a few hundred dollars.
If you are behind on a bill, contact the creditor directly and ask about a payment plan. Many utilities, medical providers, and other businesses will let you spread the payment over several months with no interest or a lower fee than a cash advance would cost.
If you have an emergency fund or savings, using that money avoids interest and fees entirely. If you do not have savings, a cash advance should be a last resort, not a regular habit. Repeated cash advances signal that your income does not cover your expenses, and that problem will not go away by borrowing.
Frequently Asked Questions
Can I take a cash advance if I have bad credit?
Yes. Credit card cash advances do not require a credit check — you can take one as long as you have available credit on your card. Online paycheck advance lenders also do not check credit; they check your income and bank account instead. Employer and credit union advances do not require a credit check either.
Does a cash advance hurt my credit score?
Taking a cash advance itself does not hurt your score, but it increases your credit utilization (the percentage of your credit limit you are using), which can lower your score slightly. Missing payments or carrying a high balance for months will damage your score more significantly.
What is the difference between a cash advance and a payday loan?
A payday loan is a short-term loan from a specialized lender, usually due in full on your next payday. A cash advance can come from your credit card or employer and may have different repayment terms. Payday loans typically charge higher fees (often $15 to $20 per $100 borrowed) than employer or credit union advances, but similar fees to online paycheck advance apps.
Can I take a cash advance from multiple credit cards?
Yes, you can take a cash advance from each card up to its individual cash advance limit. However, doing this increases your total debt and interest costs significantly. Each advance charges its own fee and interest rate, so the total cost grows quickly.
How long does a cash advance stay on my credit report?
A cash advance itself does not appear on your credit report. However, if you miss payments or default on the balance, that missed payment or collection account will appear and stay on your report for seven years.