A cash advance on a credit card is a loan that allows you to withdraw cash against your card's available credit line. When you take out a cash advance, you are essentially borrowing money from your credit card issuer. The cash advance amount is added to your credit card balance and must be repaid. Key points about cash advances on credit cards:
- The cash amount withdrawn cannot exceed the available credit on your card.
- Cash advances often come with higher interest rates than regular credit card purchases.
- Interest on cash advances typically starts accruing immediately—there is usually no grace period.
- There is often a cash advance fee, usually around 3-5% of the amount withdrawn, with some cards imposing a minimum fee (e.g., $10).
- Cash advances can be obtained at ATMs (using a PIN), bank branches, convenience checks linked to your credit card, or sometimes over the phone.
- There may be daily or transaction limits on how much cash you can withdraw via a cash advance.
Due to the high fees and immediate interest accrual, cash advances can be an expensive way to access cash, so they are generally recommended only for emergencies or urgent cash needs. In summary, a cash advance on a credit card is a short-term loan against your credit limit, accessible in cash form, but with higher costs compared to regular purchases. This explanation synthesizes information from several reliable sources including Chase, Capital One, Bankrate, and Bank of America.
