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If you need cash right away, a credit card cash advance is a way to withdraw from your credit card’s credit line. Cash advances often come with a cash advance fee and an interest rate that may be higher than what’s standard for regular credit card swipes.
Because of this, taking out a personal loan or borrowing money from a family member or friend could be a more affordable move in a pinch. If you’re still considering a cash advance to bridge a financial gap, we’ll explain how it works, the cost and better ways to get fast cash.
- What is a cash advance?
- How to get a cash advance from a credit card
- Best cash advance credit cards
- Cash advance alternatives
- Bottom line
What is a cash advance?
A cash advance is when you borrow against your credit card’s line of credit. Maybe you need cash to pay a babysitter or the plumber — a cash advance can quickly give you a stack of bills in hand. Borrowing from your credit line can be tempting because it’s fast money, but it’s also expensive money.
Compared with purchases, a cash advance, on average, will cost you more. That’s because credit card companies usually charge a fee for each withdrawal and the cash advance APR is often higher than standard APR. Also, interest kicks in on the day you take out the cash advance. For purchases, you typically get a grace period before interest applies to your balance.
If anything, a cash advance should be something you do only in emergencies. Make it a habit and you could find yourself racking up finance charges that spiral out of control.
Common cash advance terms and fees
Before you proceed, these are the terms and fees you should know that are associated with cash advances:
- Cash advance APR: Cash advances carry a separate — and typically higher — APR from your credit card’s regular purchase APR. It’s common to see cash advance rates above 20%.
- Cash advance fee: Card issuers often charge a flat fee or percentage per advance. It’s typical to see a fee of 3% or 5% tacked onto each withdrawal.
- Convenience checks: Your credit card statement may come with blank checks that you can use to write checks to yourself to draw a cash advance from your credit line.
- Grace period: This is a period of time before the card issuer will charge interest on the money you borrow. Card issuers often give you a grace period of 21 to 25 days for purchases, but there’s usually no grace period for cash advances.
- ATM or bank fee: A fee that may be charged by the ATM servicer and card issuer when you withdraw cash from an out-of-network ATM.
- Cash advance credit limit: The card issuer may limit how much cash you can draw from your credit line. For example, you may receive a $3,000 credit limit, but only $500 can be used for cash advances.
How to get a cash advance from a credit card
There are three ways you can draw cash from your credit card:
- Withdraw at an ATM. You may have already set up a credit card PIN. If not, you can contact the issuer to request a PIN that you can use with your card at an ATM.
- Visit your bank. You may be able to make an over-the-counter cash advance withdrawal from your credit card at your local bank.
- Write a “convenience” check. You can write out a check to yourself and then cash it.
Best cash advance credit cards
If you’re interested in a cash advance, based on our research of cards available through CompareCards, as well as top cards offered by major issuers, these are two of the best cards to do it with since they don’t charge a cash advance fee and have a low ongoing cash advance APR:
PenFed Platinum Rewards Visa Signature® Card
- Standard APR: 13.49%to 17.99% variable
- Cash advance APR: 17.99% variable
- Cash advance fee: None
- Grace period: None
- Annual fee: $0
The PenFed Platinum Rewards Visa Signature® Card offers a $100 statement credit when you spend $1,500 in first 90 days for new cardmembers as well as 5X points on gas at the pump, 3X points on groceries, 1X points on all other purchases. The regular APR for purchases is 13.49%to 17.99% variable. However, applicants must have excellent/good credit to qualify.
PenFed is a credit union, but membership is open to anyone. If you’re not eligible through military service, your employer or your place of residence, you can qualify by joining Voices for America’s Troops or the National Military Family Association.
Visa® Platinum Cash Back Rewards Credit Card from Stanford FCU
- Standard APR: 8.99% to 17.99% variable
- Cash advance APR: 8.99% to 17.99% variable
- Cash advance fee: None
- Grace period: None
- Annual fee: $0
The Visa® Platinum Cash Back Rewards Credit Card from Stanford FCU allows cardmembers to earn 2% cash back on dining and 1% on all other purchases as well as a balance transfer intro 0% Introductory APR for six months from account opening. Offer valid between 4/22/2020 and 7/21/2020. After which the APR will be 8.99% to 17.99% variable. The balance transfer fee is none.
Credit union membership is also open to anyone. If where you work or live doesn’t qualify you, you can become eligible by joining Friends of the Palo Alto Library (FOPAL) or Museum of American Heritage (MOAH).
Cash advance alternatives
A cash advance is best used when you have the funds to pay off what you borrow right away. If that’s not the case, it may be better to explore some alternative solutions.
Apply for a personal loan
Having a good-to-excellent credit score could land you a single-digit interest rate on a personal loan. Personal loan rates could range from about 6% to 35% APR. If you need to borrow several thousand dollars, a loan offers a lump sum with a fixed APR and a set payoff schedule. Credit card issuers often let you make minimum payments that are a small fraction of the balance. Getting into the habit of just making minimum payments though can land you in an expensive debt trap.
Get a paycheck advance
Paycheck advances and payday loans from online and storefront lenders are notorious for being expensive — sometimes with interest rates as high as 400%. However, Earnin and other new apps are offering affordable paycheck advance alternatives. Earnin gives advances of $100 per pay period with no fee and up to $500 later once you prove you’ll pay back the loan. Branch and Dave are examples of other apps offering cash advances that could tide you over until payday.
Borrow from a family member or friend
Borrowing from someone you know can help you avoid the high cost of cash advances. But make sure you set clear repayment terms because money disputes can cause relationship rifts.
Borrow (or withdraw) from your 401(k)
Borrowing from your 401(k) may not be as quick as a cash advance, but it could cost less. Interest rates on a 401(k) loan vary, but it’s often the prime rate plus around 1%. If you’re facing financial difficulty because of coronavirus, you may be able to take a penalty-free distribution instead of a loan from your 401(k) thanks to the CARES Act. Ideally, you should dip into your retirement nest egg sparingly or not at all. However, it may be cheaper to borrow from yourself when times are tight.
Taking out a cash advance is often not the best way to get money because there’s a fee and interest starts building right away on your balance. But things happen, especially cash emergencies. If you find yourself in a position without another fast option, try to borrow from a card that doesn’t have an advance fee and make paying it off as quickly as possible a top priority so you can limit finance charges.