When you take out a cash advance, you will be charged interest from the date of the transaction. This is different from making a purchase with your card, which usually offers a grace period of at least 21 days before interest is charged. Cash advances do not have a grace period, so interest starts to accrue on the balance as soon as the transaction is completed. The APR for cash advances is usually higher than for purchases, and you will always pay a financial charge in a cash advance, even if you pay it in full when your statement arrives.
You can obtain a cash advance from an ATM using your physical card and a personal identification number (PIN). You may also be subject to daily ATM withdrawal limits and fees similar to those applied to checking accounts. If you apply for a cash advance in a foreign currency, you may also be charged a foreign transaction fee. You can also get a cash advance by credit card in person at a local bank branch or by cash advance check.
Essentially, a cash advance is a short-term loan, and the borrower can receive cash or a cash equivalent, usually up to 20% or 30% of the available credit limit on the card. A cash advance does not directly affect your credit score, and your credit history will not indicate that you borrowed one. Instead of getting a cash advance to pay a bill, you may be able to ask your creditor to extend or change its due date. A personal loan might be less expensive than getting a cash advance on your credit card.
If you know there is a cash advance in the future, consider using a credit card that offers 3% cash advances instead of those that charge 5%. Free of charge and with a lower APR than the industry standard for cash advances, this card will make a cash advance much less burdensome. For example, if your credit card is set up for overdraft protection, the overdraft amount will be treated as a cash advance. Keep in mind that most credit card companies don't allow you to take your entire line of credit in the form of a cash advance. To get the most out of your cash advances, it's important to understand how they work and how they differ from other types of transactions.
Knowing this information can help you make informed decisions about when and how to use them.