How Is a Credit Card Cash Advance Charged?

Creditors charge cash advances differently than regular purchases.

Cash advances from credit cards have different charges than regular credit card purchases. Many cards charge a higher interest rate as well as other upfront fees. Be sure to read your credit card disclosure statement to know exactly how much you will end up paying for a credit card cash advance.

Upfront Fees

The upfront fee is either a percentage of the cash advance amount or a flat fee the creditor charges you at the time of the advance. Creditors charge this fee to your total balance on the card. The upfront fees on a credit card cash advance vary by creditor.

Interest

Creditors charge you higher interest for cash advances than they do for normal purchases. Interest rates for cash advances vary, but can oftentimes be as high as 25 percent.

Grace Period

Most credit card purchases have an interest rate grace period. This means that if you pay off your credit card balance in full, the creditor doesn't charge you interest on your purchases. The interest charges on a cash advance begin the minute you take the advance and are not subject to grace periods.

References

• Bankrate: Cost of Cash Advances
• Young Money: Credit Card Cash Advance Pitfalls