Getting A Cash Advance With A Credit Card
Miranda Crace5-minute read
UPDATED: July 26, 2023
Emergencies can happen any time, and you may find yourself in need of cash quickly. If you don’t have enough money in your bank account, you may have the option to take out a cash advance using your credit card.
What is a cash advance, though, and how does it work? This article will explain how a cash advance could help you in your financial needs, as well as what getting one could cost you.
What Is A Cash Advance?
A cash advance is a short-term cash loan you can get by using your credit card. If your card allows it, you can borrow a certain amount of money against your credit line and pay it back later.
Cash advances are known for their accessibility, as you can receive your cash almost immediately through a traditional bank or ATM by using your credit card.
How Do Credit Card Cash Advances Work?
Cash advances are similar to cash withdrawals, only you’re not taking money from your own account, like you would with a debit card. Instead, you’re borrowing against your credit line and having that amount added to your credit card balance. Taking out a cash advance is essentially like using your credit card to buy money instead of purchasing a good or service.
Unlike most types of loans, a cash advance doesn’t require a credit check or application. Since the cash is coming directly from your credit card issuer, the card you have should be enough to qualify you for the cash advance.
You can generally borrow only a percentage of your total credit line, which can cap at only a few hundred dollars, depending on your credit limit. Borrowing caps can differ between credit cards, so you should ask your card issuer about your cash advance limits.
How To Get A Cash Advance From A Credit Card
You can typically acquire a cash advance through the following means:
- A traditional bank: If you go into a brick and mortar bank where you have an account, you can get a cash advance right from a teller if you present them with your credit card and personal identification.
- An ATM: Once you’ve set up a PIN through your credit card issuer, you can insert your card into any ATM that accepts your network, input your PIN and withdraw a cash advance.
- Convenience checks: Credit card companies can supply you with convenience checks linked to your account. You can make a check out to yourself and cash it for a cash advance.
This ease of access may make a cash advance seem too good to be true if you’re in need of fast cash, which it unfortunately is in a way.
Why A Cash Advance Can Be Expensive
A cash advance, sadly, isn’t free money. Aside from the fact that you’re expected to pay back your whole advance as part of your credit balance, there are also numerous additional costs associated with cash advances. Let’s take a look at some of the ways a cash advance can end up costing you more in the long run.
Cash Advance Fees
Your credit card issuer may impose a service charge for your cash advance, either as a flat fee or a percentage of your amount advanced. A typical cash advance fee can be around 3 – 5% of the amount borrowed.
If you borrow your cash advance from an ATM, you can also be subject to transaction fees from the bank or company that owns the machine.
Cash Advance APR
Cash advances often come with a high annual percentage rate (APR) attached to them, and higher interest rates than you’d be charged for making a regular purchase with the same card. Not only that, but there’s no grace period before your cash advance starts accruing interest, which can start from the moment you make your cash withdrawal.
Talk to your credit card issuer about what fees they charge before taking a cash advance. You can potentially limit what your advance can cost you if you borrow only what you need and have a plan to repay the advance before you accrue too much interest.
Cash Advance Alternatives
Since a cash advance can end up costing you in fees and interest, consider some of these other options for your financial needs.
A personal loan is similar to a cash advance in that both can give you a lump sum of money that you can generally use for anything you need, but getting a personal loan can be more of a process. You have to apply for a personal loan through a lender or lending platform and undergo a credit check before you can be approved for the loan. Personal loans can also take longer to distribute than a cash advance, typically 1 – 7 business days.
However, if you have a good credit score, you could qualify for lower interest rates on a personal loan than you’d get with a cash advance. Having a lower APR can do a lot to save you money down the road, especially with a fixed-rate repayment plan.
Additionally, some lending platforms, like Rocket Loans℠, can offer same-day financing for personal loans, meaning you could receive your money the same day you’re approved.*
You can avoid the fees associated with a cash advance altogether if you build up a healthy emergency fund. If an emergency comes up and you need cash fast, you can just dip into your savings for some immediate funds.
Borrowing From Friends Or Family
There is also the option to ask friends or family for a small loan, and you can possibly bypass fees and interest charges by going through someone you know. However, it can be awkward or uncomfortable to ask someone for money, and failing to pay the amount back could affect your relationship with that person.
While the perks of a cash advance may sound great at first, a deeper look reveals the additional expenses you could face by taking an advance out. What you may gain in immediate cash delivery you can lose in transaction fees, and high interest rates and APR. If you’re prepared to pay the cost and you have a repayment plan in place, a cash advance could provide you with the extra funding you need. Otherwise, it could be smart to keep your options open.
If you think a personal loan sounds like a better option for you, apply today with Rocket Loans and see what rates you might qualify for.
*Same day funding is available for clients completing the loan process and signing the Promissory Note by 1:00 p.m. ET on a business day. Also note, the ACH credit will be submitted to your bank the same business day. This may result in same day funding, but results may vary, and your bank may have rules that limit our ability to credit your account. We are not responsible for delays that may occur due to an incorrect routing number, an incorrect account number or errors of your financial institution.
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