How to Avoid Cash Advance Fees and Save Money

Don’t get hit with big cash advance fees. See how they work and how to avoid them.
Last updated Aug. 10, 2022 | By Ben Walker, CEPF
Woman smiling and holding credit card

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If you’re short on funds to pay for an important expense, you might consider getting a credit card cash advance to get the money you need. Many credit card companies allow you to take out a portion of your credit line in cash. But in most cases, you’ll have to pay cash advance fees and a high interest rate on any cash you acquire this way.

Just like you want to avoid overspending on bills, it’s best to avoid these fees if you want to save money. Learn how a cash advance works and what types of credit card transactions might be considered cash advances so you can avoid these expensive fees.

In this article

What is a cash advance?

A cash advance on a credit card is basically a short-term loan offered to you by your credit card company. The maximum loan amount is typically based on a percentage of your credit limit. For example, if your credit card has a $5,000 line of credit, your cash advance limit might be $1,000 (20% of your credit line). The exact percentage varies by card.

Cash advances often come with high fees and higher interest rates than your credit card’s normal annual percentage rate (APR).

You might consider using the cash advance function on your credit card if you need to quickly access cash rather than putting something on credit. For example, you might consider a cash advance in a financial emergency where credit isn’t accepted and there’s not enough in your emergency fund, savings account, or checking account.

You typically have several options to get a cash advance on your credit card:

  • At the bank or credit union: Many banks and credit unions allow you to get a cash advance from your credit card if you visit a branch. You typically need a form of identification, such as a driver’s license, along with your credit card to get a cash advance in person. There might be a bank fee involved.
  • At an ATM: Getting a cash advance from an ATM means swiping your credit card instead of your debit card. You likely need a personal identification number (PIN) set up on your credit card to get a cash advance from an ATM. You also might be restricted to ATM withdrawal daily limits.
  • Online: If you have a credit card and bank account from the same bank, you might have the option to request a cash advance online and have the money deposited into your account.
  • With a convenience check: If you have convenience checks from your credit card company, you should be able to use them for cash advances on your credit card.

Be aware that some of these options could incur more charges in addition to the fees already associated with a cash advance. Financial institutions may charge you for processing the transaction.

Cash advances don’t have a direct impact on your credit score. They do add to your card’s balance, so if you don’t pay them off right away, they could increase your credit utilization and lower your score.

It’s also important to know that some credit card purchases could also count as cash advances and be subject to cash advance fees. This could include sending money with a credit card through different payment apps like Venmo or even purchasing a lottery ticket.

What is a cash advance fee?

A cash advance fee is a fee that’s typically included with any cash advance transactions made on your credit card account. Whether you request a cash advance at a bank, an ATM, online, or with a convenience check, there’s often a fee attached to it. This fee is in addition to the higher APR associated with cash advances. To calculate the cost of a cash advance, you would need to consider both the cash advance fee and higher APR.

Let’s say your credit card has a variable APR of 15.99% to 22.99%. Interest starts accruing within this APR range (depending on your creditworthiness) if you carry a balance. When you make purchases with a credit card, you typically aren’t charged interest if you pay for those purchases in full by your credit card’s due date.

For credit card cash advances, you have a separate and higher APR for paying back the money you borrow that starts immediately. In this example, your cash advance APR might be something like 24.99%.There’s typically no grace period for cash advances like there is for purchases. Cash advances usually start accruing interest right away.

Cash advance fees are also typically charged immediately. It’s not uncommon for a cash advance fee to be the greater amount of a percentage of your total transaction or a flat fee. For example, you might see a cash advance fee of $10 or between 3% to 5% of the cash advance amount. To find your specific card’s fees, check the terms and conditions in your online account or on the card issuer’s website.

Cash advance fees for major issuers

If you compare credit cards, you’ll find different cards have different rules when it comes to cash advance fees. This could mean one card might charge higher fees than another. But this is typically only the case if two credit cards are from different card issuers.

For credit cards from the same card issuers, the cash advance fees are often the same across the board. And in general, cash advance fees from major credit card companies are identical or very similar. Here’s what you can expect from five of the most well-known credit card issuers:

Credit card issuer Example card Cash advance fee
Capital One Capital One VentureOne Rewards Credit Card $10 or 3%, whichever is greater
Chase Chase Freedom Flex℠ $10 or 5%, whichever is greater
Bank of America Bank of America®️ Customized Cash Rewards Credit Card for Students 3% to 5% (depending on method of cash advance) or $10, whichever is greater
Discover Discover it® Cash Back $10 or 5%, whichever is greater
American Express American Express® Gold Card $10 or 5%, whichever is greater (See rates and fees)


FAQs

How do you calculate a cash advance fee?

You would need to know the cash advance amount and how much your credit card issuer charges for cash advances on the specific credit card in question. For example, the Chase Sapphire Preferred® Card charges the greater amount of $10 or 5%, whichever is greater of any cash advance transaction. So a $500 cash advance would come with $25 of cash advance fees (5% of $500 is $25, which is higher than the $10 fee). The amount charged for cash advance fees can be found in your credit card’s terms and conditions.

How do I find the cash advance fee for my credit card?

If you check the terms and conditions of your credit card, you should be able to see how much the cash advance fee is. Credit card terms and conditions are typically available online on credit card information pages, as well as application pages on the card issuer website. The Consumer Financial Protection Bureau also maintains a credit card agreement database.

Alternatively, you could reach out to your credit card company by calling the customer service line or sending a secure message through your online account.

How do you avoid cash advance fees?

Here are a few options to avoid cash advance fees:

  • Personal loans if the fees and interest rates are lower
  • Borrowing money from a friend or family member
  • Paycheck advance apps that can send your paycheck early
  • Payday loans, which aren’t typically recommended because of fees and high interest rates
  • Peer-to-peer (P2P) loans if the fees and interest rates are lower than the cash advance
  • Work on budgeting so you can build an emergency fund (even setting aside a small amount of cash each paycheck can help)

Bottom line

The best way to avoid cash advance fees is to not do a cash advance with a credit card. That’s simple enough, but avoiding cash advances completely gets tricky depending on how your card issuer codes certain purchases. You might find one credit card company will treat a specific purchase as a cash advance, which will charge cash advance fees, whereas another company won’t.

Fortunately, it’s become more common knowledge that certain purchases, such as person-to-person money transfers (like sending money with Venmo), with credit cards will often incur cash advance fees. For more information, check out our list of the best credit cards for Venmo.


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Author Details

Ben Walker, CEPF Ben Walker, CEPF, is a credit cards and travel writer at FinanceBuzz who loves helping others achieve their travel goals through financially sound decisions. For over a decade, he has been using credit card points and miles for the sole purpose of traveling the world. Ben is a Certified Educator of Personal Finance and has been featured in The Washington Post, MSN, Debt.com, and Finder.com.