What is a Cash Advance?
Let’s Learn About: Cash Advances On Your Credit Card
Your cash advance credit line is part of your total credit line.
There is typically a cash advance transaction fee.
Interest on a cash advance transaction typically begins accruing when you withdraw the cash.
A cash advance lets you use your credit card to withdraw instant cash as a short-term loan at a bank or ATM. While credit cards are commonly used to buy things in place of cash, they can also help you access dollars you may need to make a cash purchase.
However, there are some important differences between getting a cash advance on a credit card and typical credit card purchases. Here are some things for credit card holders to keep in mind about cash advances.
What you need to know about cash advances
Think of a credit card cash advance as a short term loan that’s similar to a payday loan. If your credit card has a personal identification number (PIN) – the security code for verifying your identity – you can withdraw the money straight from an ATM. Otherwise, you can get the advance from a bank teller, move cash from your credit card to your checking account, or cash a convenience check. Essentially, you’re borrowing cash against your credit line instead of using your credit card to make a purchase.
However, while purchases on your credit card generally come with a grace period that allows you to avoid interest charges if you pay the statement balance in full by the payment due date each month, cash advances are handled differently.
Interest typically starts accruing on cash advances from the time you take the money out – there usually isn’t a grace period. Even if you make your payment in full by the due date, you’ll most likely be charged interest for each day between the day you received your cash advance and the time you repay the entire cash advance amount.
What is a credit card cash advance?
A credit card cash advance is money borrowed against your credit limit, allowing you to use your credit card to access instant cash. It’s similar to using a debit card to withdraw money at an ATM, only the cash is deducted from your credit limit instead of your bank account balance.
Most cash advances on credit cards come with a cash advance transaction fee and a higher APR. Check your cardholder member agreement for details on your particular card. This fee may be a set dollar amount per transaction, or it could be a percentage of the total cash amount you’re taking from your credit card account.
Credit card cash advances can be useful to fund emergencies because you may be able to withdraw cash from your credit card at an ATM, if your credit card uses a PIN. However, some banks may charge additional ATM fees, or set certain restrictions on getting cash advances from your credit card.
Some things to keep in mind with a cash advance
Your recent credit card statement and online account will likely have information about your cash advance limit, which is usually capped at a percentage of your total credit limit. You can also check your credit card terms to determine any fees.
Before getting a cash advance on a credit card, you should find out whether the interest rate on a cash withdrawal is different from the one on your standard purchases. Refer to your cardholder agreement for more details on your cash advance interest rate.
Foreign cash advances come with extra costs
Cardholders trying to get foreign currency cash advances from their American credit cards while traveling may get hit with a double or triple whammy when it comes to transaction costs. Foreign transaction fees plus ATM fees on top of the cash advance fee add up quickly, and this is all on top of the already higher interest rate you may be charged for the cash advance.
Some credit cards come with foreign transaction fees that add anywhere from one to three percent to your cash advance, and there may be additional ATM fees plus the currency exchange. Consider carefully whether or not a cash advance is worth the additional fees.
Discover cards that offer cash advances
If you have a Discover credit card, you can get cash with your Discover Card from participating banks and credit unions, ATMs with the PULSE logo, checks that draw on your available credit, and by depositing cash from your Discover Card directly into your checking account.
Keep in mind that each card has an associated cash transaction fee, which you can find in your cardmember agreement, and some ATMs may have additional fees and restrictions. You can check your available cash credit line by visiting your account center and selecting “card info.”
One of many cards that offers cash advances is the Discover It® Cash Back Credit Card, which offers 5% cash back at different places each quarter up to the quarterly maximum each time you activate. Discover will automatically match all the cash back you’ve earned at the end of your first year.1 There is no limit to how much we’ll match.
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