Cash Advance APR Fees and Alternatives

You might have heard of a cash advance as an easy way to access funds, but this is a loan that should be treated just like any credit card transaction. Consider weighing your options before taking out a cash advance.


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What is a Cash Advance?

A cash advance is a type of short-term, cash loan available through your credit card provider. You can use your credit card to withdraw cash at a bank or ATM, but the amount has to be paid back with interest. This arrangement might be convenient when you’re in a pinch for cash, but usually comes with a steep price tag.

Why Cash Advances are Expensive

While getting a cash advance might be easy, the rates and fees associated with the financing option are some of the highest on the market. That’s because cash advances work differently from any other credit card transaction. Here are the major factors that contribute to the expensive price:

Normally, the Annual Percentage Rate (APR) associated with these loans is in the 20% range, at least. Most expenses come from 3 sources: cash advance fees, ATM or bank fees, and interest rates.

Cash advance fees are charged by your credit card issuer. Some enforce a flat fee while others charge a certain percentage of the amount taken out. Or, you might see a percentage charge paired with a minimum dollar amount, whichever is greater.

Depending on where you take out the funds, you might run into additional fees from the bank or owner of the ATM.

Interest rates on cash advances are generally higher than any other credit card rates, like standard purchases and balance transfers. On top of that, interest usually starts adding up right when the transaction clears your credit card account. There’s no grace period, which means you aren’t given a full billing cycle to repay the total.


If you find yourself in need of a cash advance, it might point to the fact that you need to boost cash flow for your small business. If so, get started with SmartBiz Advisor today and find out how you can improve your unique situation, if needed. We’ll provide you with personalized insights and recommendations tailored for your small business and help you prepare for a low-cost, long-term SBA loan or another type of loan to help strengthen your business and fuel growth. Learn more about SmartBiz Advisor and get your Loan Ready Score here.



* The information provided through SmartBiz Advisor, including the Loan Ready Score, is for educational purposes and is not the same as scores used by lenders for credit decisions. SmartBiz Advisor is not a financial or legal advisor as defined under federal or state law. Use of this information is not a replacement for personal, professional advice or assistance regarding your finances or credit history.