A cash advance is a financial service offered by most credit card issuers that allows a user to withdraw cash from an ATM or transfer funds directly into a bank account using their credit card. Unlike standard purchases, which often provide a grace period before interest accrues, cash advances generally begin accumulating interest the moment the transaction is processed.

In addition to higher interest rates—which are often significantly above the standard purchase APR—cardholders are usually subject to a transaction fee. This fee is typically calculated as a percentage of the total amount advanced, often with a set minimum dollar amount. Because of these costs, financial experts generally categorize cash advances as a high-cost form of borrowing intended only for emergency situations where other liquidity options are unavailable.

There is no universal standard for how these transactions are processed across all banks; however, most issuers impose a separate, lower credit limit for cash advances than the total credit limit assigned to the card. Furthermore, payments made toward a credit card balance are often applied to lower-interest debt first, meaning that the high-interest balance of a cash advance may persist longer than other charges. Consumers are advised to review their specific cardholder agreement to understand the exact fee structure and interest implications associated with their account, as terms vary significantly between financial institutions.