What Is a Cash Advance? Types, Costs and How It Works

A cash advance is a way to get cash quickly when you need it most by using a cash advance app, certain credit cards or tapping into your future earnings. With roughly a quarter of Americans unable to pay their bills reported in May 2025, cash advances could become a more prevalent way of making ends meet. 

This complete guide will break down the different types of cash advances, their costs and what to look out for so that you can keep your wallet — and credit score — in good shape.

Key Takeaways

• A cash advance is fast access to cash — through a cash advance app or a credit card — typically for up to $500.

• Costs vary widely by type. Many cash advance apps and earned wage access charge 0% interest, while the most common credit card cash advance APR is 30%, according to the CFPB, plus a fee that's usually the greater of $10 or 5%.

• Credit card advances are capped by your limit. You can usually withdraw about 10% to 30% of your credit limit, so a $1,000 limit means roughly $100 to $300.

• Payday loans cost far more. A typical two-week payday loan charges about $15 per $100 borrowed — an APR of nearly 400%, according to the CFPB.

• Earned wage access won't hurt your credit. Because it's money you've already earned and not a loan, it isn't reported as debt, unlike a credit card cash advance that raises your utilization.

• Check alternatives first. Personal loans, buy now pay later, a side hustle or borrowing from family may cost less than a short-term advance.

Summary generated by AI, verified by MoneyLion editors

What Are Cash Advances and How Do They Work?

A cash advance is a method to get access to cash right away, either through an instant cash advance app, earned wage access or a credit card cash advance.

These services all achieve the same purpose: Helping you get cash quickly. But there are a few differences to be aware of. 

What Are Instant Cash Advance Apps?

Instant cash advance apps are financial tools that offer short-term funds with repayment pulled from your next bank deposit. Some instant cash advance apps charge fees or interest, while others are free. It just depends on the app.

What Is Earned Wage Access?

Earned wage access (EWA) is a service that lets you access your earned but unpaid wages before your next scheduled payday. A key difference is that EWA isn't a loan. It’s a way to access money you’ve already earned. 

Services like MoneyLion Instacash^® can help you access up to $500 of your already earned wages with no interest since it isn't a loan, credit check or mandatory fees*.

What Is a Credit Card Cash Advance?

A credit card cash advance is when you use your credit card to withdraw physical cash against your credit limit. Unlike most cash advance apps or EWA, credit card cash advances typically charge interest and fees.

The amount you can withdraw is typically between 10% and 30% of your credit limit. If you have a credit limit of $1,000, then you can likely get a cash advance for between $100 and $300.

All of these cash advance options are different, and typically more attractive, than payday loans. Let’s explore the differences.

Cash Advances vs. Payday Loans: Key Differences 

While there’s no set definition for “payday loan”, the Consumer Financial Protection Bureau considers a payday loan as a short-term loan generally around $500, with the balance due on or before your next payday. Payday loan laws and availability vary between the different states, but when they are available, you can generally find them in stores or online.

Unlike cash advances, payday loans are known for being very expensive. They cost typically an average of $15 for every $100 borrowed, according to the Consumer Financial Protection Bureau (CFPB). Since most payday loans have a 2-week repayment period, this works out to an annual percentage rate (APR) of nearly 400% typically. Here are a few payday loan scenarios: 

• Borrow $100, repay $115

• Borrow $200, repay $230

• Borrow $300, repay $345

• Borrow $400, repay $460

• Borrow $500, repay $575

This also doesn’t include extra costs, like renewal fees, repayment plan fees, late fees and prepaid debit card fees. However, the final cost you pay for a payday loan will ultimately depend on your state’s rules and regulations.

Compare this cost to services like cash advance apps, which can help you get up to $500 with no interest or mandatory fees. 

Typical Costs and Fees Associated with Advances 

Here's a look at how each service stacks up in terms of interest, fees and terms.

Keep in mind that the figures in the table above are just averages, and the final price you pay will depend on plenty of other factors, including your credit score and income, plus additional costs like ATM fees, out-of-network fees or additional interest charges.

Most lenders cap their cash advances to protect both themselves and the borrower. Extending too much cash can result in a borrower who’s buried in debt, which makes it even harder for them to repay.

Can a Cash Advance Impact Your Credit Score?

Here’s how cash advances can affect your credit:

1. Potential for missed or late payments: The added debt can be hard to manage. Even one late or missed payment can harm your credit score. This isn’t the case for earned wage access, however. Earned wage access doesn't affect your credit score because it's based on your earned pay, not debt.

2. Increased credit utilization: When you take a credit card cash advance, it immediately raises your credit card balance. This can result in a credit utilization ratio, which can cause your score to dip.

3. Interest accrual: If you don't repay your cash advance in full, then it may start accruing interest and force you to only make the minimum payments. This can result in compounding costs over time that may make it harder to repay your full balance.

Cash advances can be handy when you're a bit strapped for cash. But it’s important to understand the potential long-term risks to your credit and financial health.

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Alternatives to Cash Advances To Consider

Always explore your options beyond cash advances first before signing up for a pricey short-term loan.

If you're looking for more ways to get cash quickly, these options may be worth exploring:

• Small personal loans: These loans come with fixed terms and predictable monthly payments, so you’ll always know exactly what you owe. They're a good option for larger, planned expenses.

• Peer-to-peer (P2P) lending apps: These services connect borrowers directly with individual investors who often offer more flexible approval than traditional banks. You might find lower interest rates and fewer hoops to jump through.

• Buy now, pay later: These services let you split purchases into smaller, interest-free installments. They’re handy for spreading out costs. Just do your best to keep up with the payments to avoid late fees and interest.

• Family and friend loans: Asking your friends or family for money is almost always interest-free, but it can also be potentially awkward.

• Pick up a side hustle — many pay $500 in a week: A part-time gig or freelance project can be a great way to earn extra cash on your schedule. Even a few hours a week can help bridge the gap between paychecks or cover surprise bills. 

• Pawn shops: Pawn shops can help you get quick cash by using an item as collateral to secure a loan. The downside is that you'll only get a fraction of the item’s value and, if you can’t repay the loan, you’ll lose the item.

Cash Advances: What Else To Know

Cash advances can be a helpful safety net when money's tight, but it's important to understand how they work and what they might cost you over time. 

Instant cash advance apps and earned wage access tend to be more affordable and flexible, while credit card advances and payday loans can pile on fees and interest fast. 

Before borrowing, be sure to explore all available options, like picking up a side hustle or tapping into your future earnings to find what fits best. With the right approach, you can get the cash you need today without creating bigger financial headaches tomorrow.

FAQs

Can I get a cash advance from any ATM using my credit card without fees?

No, cash advances typically charge between 2% and 5% of the advance. You may also be subject to ATM fees if the ATM is out-of-network.

When does interest start accruing on a cash advance?

Interest on a credit card cash advance usually begins accruing immediately after the withdrawal. That said, many cash advance apps don't charge interest.

Are multiple small cash advances more expensive than one larger advance?

Yes, it’s usually more expensive to have multiple cash advances, since each transaction could trigger its own fee(s).

Will making only minimum payments on a cash advance reduce my interest charges?

Making only the minimum payments on a cash advance typically does not reduce the interest charges significantly, as interest continues to accrue daily on the remaining balance until it is fully paid off.

Can I use my credit card for cash advances at ATMs when traveling internationally?

Most major issuers allow you to make cash advances from international ATMs, but you may face foreign transaction fees, currency conversion markups, and additional ATM charges.

Key Terms

• Cash advance: A way to get cash quickly using a cash advance app, earned wage access or a credit card, usually for a small amount and repaid from your next deposit or credit line.

• Cash advance app: A financial tool that offers short-term funds, with repayment pulled from your next bank deposit; some charge fees or interest and some are free.

• Earned wage access (EWA): A service that lets you tap earned but unpaid wages before payday. It isn't a loan, so it doesn't create debt or affect your credit score.

• Credit card cash advance: Withdrawing physical cash against your credit limit, typically 10% to 30% of the limit. Interest starts accruing immediately at a higher cash-advance rate — most commonly 30%, per the CFPB — plus a fee usually the greater of $10 or 5%.

• Payday loan: A short-term, high-cost loan generally for $500 or less that is typically due on your next payday, often carrying an APR near 400%.

• APR (annual percentage rate): The yearly cost of borrowing, including interest and certain fees, expressed as a percentage.

• Credit utilization ratio: The share of your available credit you're using. A cash advance raises your balance and can push utilization up, which may lower your score.

• Rollover: Renewing a payday loan when it comes due so you pay only the fees while the lender extends the due date, which can add cost.

Sources

• CFPB. What is a payday loan?

• CFPB. What are the costs and fees for a payday loan?

• CFPB. Data Spotlight: Credit card cash advance fees spike after legalization of sports gambling.

• CFPB. Pew Research Center.

Summary generated by AI, verified by MoneyLion editors