A cash advance fee is a charge your credit card company takes when you use your card to withdraw cash instead of making a purchase
When you use a credit card at an ATM or ask a bank teller for cash, the card issuer charges you a cash advance fee — a percentage of the amount you withdraw, or a flat dollar amount, whichever is higher. This fee appears on your statement separately from the purchase price. Most cards charge between 3% and 5% of the cash amount, though some charge a flat fee like $5 or $10 instead.
Cash advance fees are different from purchase fees. You do not pay them when you swipe your card at a store or pay a bill online. You only pay them when you physically take cash out using your credit card.
Key Takeaways
- Cash advance fees typically range from 3% to 5% of the amount withdrawn, or a flat fee like $5 to $10, whichever costs more.
- Interest on a cash advance usually starts accruing when ready, with no grace period like you get on purchases.
- The total cost of a cash advance includes both the upfront fee and the daily interest that builds until you pay it back.
- Checking your card's terms before you need cash helps you understand exactly what you will pay.
How the fee is calculated
Your card issuer sets the cash advance fee as either a percentage or a flat amount. If your card charges 4% with a $5 minimum, and you withdraw $100, you pay $5 (the minimum). If you withdraw $500, you pay $20 (4% of $500). If you withdraw $1,000, you pay $40 (4% of $1,000).
The fee appears as a separate line item on your credit card statement. It is not included in the cash amount — if you withdraw $500 and the fee is $20, you receive $500 in cash, and the $20 charge is added to your balance.
Some cards charge a flat fee regardless of amount. A $5 flat fee means you pay $5 whether you withdraw $50 or $500. A few cards marketed to specific groups (military members, students) may charge no cash advance fee, though this is uncommon.
Interest starts right away, with no grace period
Unlike a purchase, a cash advance does not come with a grace period. Interest begins accruing the day you withdraw the cash, even if you pay your full statement balance by the due date. If your card's cash advance interest rate is 25% annually, that translates to roughly 0.07% per day.
The interest rate on a cash advance is often higher than the rate on purchases. Your card might charge 18% on purchases but 25% on cash advances. Check your card's terms to see if the rates differ.
If you withdraw $500 and pay it back in 30 days, the interest alone could be around $10 to $12, on top of the upfront fee. The longer you carry the balance, the more interest accumulates.
Where you can take a cash advance
You can withdraw cash using your credit card at any ATM that displays your card network's logo (Visa, Mastercard, American Express, Discover). You can also visit a bank branch and ask a teller for a cash advance, though some banks charge an additional fee for this service.
Convenience stores, casinos, and other businesses sometimes offer cash advances at their registers, but these locations often charge their own fee on top of your card issuer's fee. Avoid these if possible — the total cost becomes very high.
Online payment services and money transfer apps do not count as cash advances. Transferring money from your credit card to a bank account or another person through these services may trigger a cash advance fee depending on your card's terms, so check before you do it.
Why the fee and interest are so high
Credit card companies charge more for cash advances because the risk is higher. When you make a purchase, the merchant has a record of the transaction and the goods or services you received. With a cash advance, the money leaves the system when ready, and there is no collateral or record of what you spent it on.
The lack of a grace period and the higher interest rate reflect this risk. The card issuer is essentially giving you an unsecured short-term loan at a premium rate.
Comparing cash advance costs across cards
If you know you will need a cash advance, comparing cards before you open one can save you money. A card with a 3% fee and 20% cash advance interest is cheaper than one with a 5% fee and 25% interest, especially if you carry the balance for more than a few days.
Some cards aimed at people with lower credit scores charge 5% or higher. Premium cards sometimes charge 3% or less. Business cards and cards for specific groups (military, students) occasionally offer lower rates or no cash advance fee at all.
Your own credit history also matters. If you have a lower credit score, you may be offered a card with a higher cash advance fee and interest rate than someone with excellent credit would receive on the same card product.
Alternatives to a credit card cash advance
If you need cash, a cash advance is usually the most expensive option. A personal loan from a bank or credit union typically charges less interest and no upfront fee. A payday loan charges high interest but may be cheaper than a cash advance if you only need the money for a week or two.
Borrowing from a friend or family member, if that is an option, costs nothing. Selling something you own, asking your employer for an advance on your paycheck, or visiting a local community information program are other routes that avoid credit card fees entirely.
If you have a debit card, you can withdraw cash from your own account at an ATM for free. If you need more cash than you have in your account, a debit card overdraft is usually cheaper than a credit card cash advance, though overdraft fees vary by bank.
Frequently Asked Questions
Can I avoid the cash advance fee by using a balance transfer?
No. A balance transfer moves debt from one card to another and is not the same as a cash advance. However, balance transfers have their own fee (usually 3% to 5%) and may carry a different interest rate. Neither option avoids a fee entirely.
Does paying back a cash advance early reduce the interest I owe?
Yes. Interest is calculated daily, so paying back the cash advance as soon as possible reduces the total interest you pay. The upfront fee is not refunded, but you stop accruing interest the day you pay the balance to zero.
What if my credit card does not have a cash advance option?
Some cards, particularly secured cards and certain prepaid cards, do not allow cash advances. Check your card's terms or call the customer service number on the back of your card to confirm whether cash advances are available on your account.
Is a cash advance the same as a cash-back transaction at a store?
No. Cash back at a store is a purchase transaction — you buy something and receive cash as part of the change. It does not trigger a cash advance fee or the higher interest rate. Only ATM withdrawals and teller requests for cash count as cash advances.
Will a cash advance hurt my credit score?
A cash advance itself does not directly damage your credit score, but it increases your credit utilization (the percentage of your available credit you are using). High utilization can lower your score temporarily. If you carry the balance and miss a payment, that will hurt your score more significantly.