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Should you use a credit card cash advance in an emergency?

Yahoo Personal Finance· Getty Images
Ben Walker (CEPF, CFEI?)
·Senior Writer, Credit Cards
7 min read

We generally don’t recommend taking a credit card cash advance because of high fees and interest rates. In almost every scenario, it will cost you more than it’s worth.

However, it could make sense as a last resort. In an emergency, you might consider taking a cash advance if you’ve exhausted your other options, such as using a 0% APR credit card or personal loan.

A cash advance is when you use your credit card to withdraw cash against your line of credit. While this is a convenient way to access money quickly, it’s often not cost-effective because of high credit card interest rates and cash advance fees.

You typically visit a bank or ATM and request a cash advance. You receive the money if the requested amount is within your card’s cash advance limit and doesn’t exceed your overall card limit or ATM limit.

Your cash advance limit is a percentage of your total credit limit. For example, a 30% cash advance limit on a $1,000 credit limit means you can withdraw up to $300. The amount can vary by card and card issuer.

The most common way to take out a cash advance on your credit card is to visit a bank or ATM. You can either request a cash advance from a banker or select the cash advance option at an ATM.

In some cases, you might need to provide a cash advance PIN. If you haven’t already set one up, you can typically request one through your online account or by calling your financial institution.

You should be able to use most ATMs (even ones not associated with your credit card issuer) to take out a cash advance, but some ATMs may charge ATM fees separate from cash advance fees.

In addition, credit card issuers could count certain transactions as cash advances, which might incur additional fees and interest. That could include many “cash-like” transactions, such as wire transfers, money orders, gift cards, lottery tickets, or other gambling-related purchases.

Depending on the card issuer, using your credit card to make payments with a mobile app, such as Venmo, could also count as a cash advance.

There are generally two charges you have to worry about with cash advances:

  1. Transaction fees: Your card issuer could charge you a straight dollar amount for the cash advance or a percentage of the total cash advance amount. For example, you might have to pay $10 or 5%, whichever is higher.

  2. Cash advance annual percentage rate (APR): Credit cards tend to have a higher cash advance APR (with a higher interest rate), which differs from the standard purchase APR. With the cash advance APR, there’s typically no grace period, which means interest will start to accrue immediately upon receiving a cash advance.

Because of the fees and high interest charges, a cash advance is an expensive way to access money.

  • Get quick cash with no collateral needed

  • Pay high fees and interest

  • Immediately start paying interest (no grace period)

  • It could affect your credit score with more credit utilization

We only recommend taking a cash advance in an emergency where you have no other options. For instance, you might need emergency car repairs during a road trip, but you can’t pay with a credit card, don’t have enough cash on hand, and have no other means of obtaining money.

If it’s not an emergency, we suggest considering your alternatives.

If it’s an option, paying with a credit card is likely better than taking out a cash advance. You often have a grace period before interest starts to accrue, so you have some time to pay off your balance.

Even better, you can use a 0% APR credit card that offers 0% introductory APR for a certain amount of time. So you won’t see any interest accrue on your eligible credit card purchases if you follow the terms of the offer, such as not missing any payments to your lender.

Some credit card companies offer programs where you can pay off your card purchases in installments. For example, you can use Chase Pay Over Time with participating Chase credit cards to make no-interest payments on eligible purchases with fixed monthly fees.

A personal loan is an unsecured (no collateral needed) sum of money that you can use to cover various expenses, such as home renovations, new furniture, debt, and more. You typically pay back your loan in fixed monthly installments.

If you have time to consider your expenses, consider a personal loan. Note that you have to apply for the loan and then wait to receive your funds if you’re approved.

Many rewards credit cards offer cash back as a redemption option. Depending on your card, you could receive cash back in the form of a statement credit, ATM withdrawal, or bank deposit. If you have spare credit card rewards, this could be the perfect solution in a pinch.

Consider asking a friend or family member for a short-term loan if your situation allows it. Their terms, if applicable, will likely be better than paying the fees and interest on a cash advance.

Buy now, pay later services are available at checkout with many online retailers. These services — including Affirm, PayPal, Sezzle, and Klarna — typically let you split a purchase into multiple installments, giving you extra time to pay it off.

You still have to be aware of the terms and conditions of these services, such as paying fees and interest, but doing buy now, pay later could make sense depending on your situation.

We don’t recommend payday loans or paycheck advance apps that charge high fees or interest. Instead, if you set up direct deposit, many banks automatically offer early paycheck direct deposits so you can access your money a few days early.

For example, SoFi Bank offers deposits of up to two days early if you set up direct deposit. That gives you some extra wiggle room to use your money, whether for paying off bills, adding to your savings, or something else.

The most common method is to visit an ATM, insert your card, enter your PIN, and select the option to withdraw cash. You can also typically visit a bank branch location, make a transfer through your online account, or use a convenience check (blank checks from your credit card company that let you write a check against your credit line).

A credit card cash advance won’t directly affect your credit score or appear on your credit report. However, taking out a cash advance uses your card’s available credit, which increases your credit utilization. If your credit utilization ratio gets too high, you could see an impact on your credit score.

A cash advance limit is typically a percentage of your total credit limit and the maximum amount of cash you can withdraw using your credit card. For example, a credit card with a $10,000 credit limit and a 30% cash advance limit would have a maximum of $3,000 cash available to withdraw.

This article was edited by Rebecca McCracken

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