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A cash advance allows you to use your credit card to get a short-term cash loan at a bank or ATM. Unlike a cash withdrawal from a bank account, a cash advance has to be paid back — just like anything else you put on your credit card. Think of it as using your credit card to "buy" cash rather than goods or services.
It's convenient, but it's quite expensive.
If you carry only credit cards for day-to-day spending, you could find yourself in a pinch when confronted with a cash-only situation, such as buying lunch from a street vendor, veggies at a farmers market or a sandwich at a mom-and-pop deli. In that case, a cash advance might be tempting. Some people also turn to credit card cash advances when they need paper money but don't have enough in their bank account.
If your credit card has a PIN, you can get cash advances directly from an ATM. Otherwise, you can take your card to a bank that offers advances through your card's payment network, such as Mastercard or Visa. You'll have to show ID.
Be aware that most credit card companies won’t allow you to take your entire credit line in the form of a cash advance. For most people, cash advances are capped at a few hundred dollars. This means that you can’t rely on your credit card to provide you with very much cash in the event of an emergency.
Getting a cash advance is easy, but it's one the costliest ways to get your hands on some cash. This is because cash advances can come with a variety of expenses:
Given the costs associated with taking a cash advance, you may be in dire financial straits if you’re considering one because there aren't enough funds in your bank account. Cash advances should be used only in extreme emergencies. If you find yourself relying on them, it may be time to make some changes or seek help, say, through a or expert.
If you do find yourself facing a cash crisis and you’re not sure where to turn, consider the options below. None may be exactly ideal, but they could end up costing less than a cash advance in the long run:
In summary, taking a cash advance on your credit card means taking on a very expensive short-term loan. This is almost never a good idea, so consider all other options before using a cash advance.