What is a cash advance on a credit card?

Core Insights - The article discusses the concept of cash advances on credit cards, highlighting their convenience but also the associated costs and risks [1][22] Cash Advance Overview - A cash advance allows users to convert their credit line into cash, typically with a limit lower than the overall credit limit, for example, a $15,000 credit limit may allow a cash advance of up to $3,000 [2] - Common methods for obtaining a cash advance include ATM withdrawals, convenience checks, and direct requests at a credit card issuer's branch [3][4] Costs and Risks - Cash advances incur multiple costs: an initial fee ranging from 3% to 5% of the advance amount, a higher APR compared to regular purchases, and interest that begins accruing immediately without a grace period [8][5] - Taking a cash advance can negatively impact credit scores due to increased credit utilization, which is a significant factor in credit scoring [6][7] Alternatives to Cash Advances - Alternatives to cash advances include using emergency savings, personal loans with lower interest rates (average APR of 12.35% for a 24-month loan), and third-party payment platforms like Plastiq or P2P services such as Venmo and PayPal [9][10][13] - Some credit cards offer features that allow users to access cash without a traditional cash advance, such as Discover's cash at checkout option and Upgrade credit card bank transfers [17][20] Conclusion - The article concludes that while cash advances can be a useful option in emergencies, their high costs and immediate interest make them generally unappealing [22]