Credit Card Cash Advance: Bad Financial Move or Good Emergency Plan?

What is a Credit Card Cash Advance?

A cash advance using a credit card is similar to using your ATM card. Instead of a debit or check card, you use your credit card and credit card PIN at the ATM to withdraw funds. Unlike a debit or check card withdrawal where you’re actually using your own money, with a credit card cash advance you are using borrowed funds, made available to you through your credit agreement.

The amount you can withdraw depends on your overall credit limit, your daily cash advance limit, as well as any overall cash advance limit that the card company may apply. As you can see, cash advances are a pretty convenient way to get quick cash. However, these types of withdrawals are discouraged because of the high rate of interest applied to these balances, associated fees, and the method with which some card companies used to incur interest and apply payments.

Cash advances can also come in a second form: checks. You’ve probably received these checks in the mail before. If you were to use these checks for anything, they would essentially be the same as doing a cash advance through an ATM.

How to Find Your Cash Advance Limit and Fee

It’s important to understand how these types of transactions will be handled. As you’ll see, it’s not the most advantageous financial move you can make. Let’s take a look at an example Schumer Box to see some of the fees and rates to be applied to these cash advance transactions. To find your Schumer Box, look on your credit card statement, or with those cash advance checks you’ve received. This first example shows the rate that will be applied to any cash advances that you use. As you can see, the rate is higher than the normal purchase rate.

Now let’s look at an example of the fees associated with cash advances. As you can see, with that type of fee, you can quickly be paying a lot just to use this type of transaction.

More Fees to Watch Out For

You also need to watch out for any ATM fees that you’ll incur to do the withdrawal. In addition to fees, you need to understand that usually interest charges for cash advances begin when you make the withdrawal. There is no grace period like for purchases. Lastly, understand that some card companies used to apply your payments to the balance on your card with the lowest rate. With the passing of the new credit card rules, understand that this has been prohibited. If you have a cash advance balance. The card company will apply your payment to that first, since it has the highest rate.

Tips for Making the Most of a Cash Advance

If you’re going to use a credit card cash advance, make sure it’s under these circumstances:

  • You fully understand your credit card terms and know what fees you’ll incur, your limit, and how the balance will be paid off.
  • You’re using a card with a $0 balance.
  • You use a no-fee ATM.
  • You can pay it off fast.

Alternatives to the Credit Card Cash Advance

There are several other ways to get cash quick. In a previous post, Easy Money, I share that you can get cash by returning things, consignment shops, peer-to-peer lending, equity line of credit, among other things. Most of those ideas are a better alternative than the credit card cash advance. But none provide the truly last minute, immediate, emergency cash that you might need when you don’t have your debit card.

I don’t even know my credit card PIN. Do you?

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Last Edited: January 31, 2017 @ 10:02 amThe content of is for general information purposes only and does not constitute professional advice. Visitors to should not act upon the content or information without first seeking appropriate professional advice. In accordance with the latest FTC guidelines, we declare that we have a financial relationship with every company mentioned on this site.
About Philip Taylor

Philip Taylor, aka “PT”, is a CPA, financial writer, podcaster, FinCon Founder, husband, and father of three. He created PT Money back in 2007 to share his thoughts on money and to meet others passionate about managing their finances. All the content on this blog is original, and created or edited by PT. Read more about Philip Taylor, and be sure to connect with him on Twitter, Facebook, or Google+. Listen to the new podcast, Masters of Money!


  1. I don’t know any of the PIN numbers on my credit cards either. It’s just an easy way to get into big trouble. I did this a few years ago and it cost me a lot of money. Every since then, when they send me a PIN, I destroy it. The only PIN I need to know is the one for my ATM/Checkcard.