Cash Advances Explained: Types, Costs & Alternatives

A cash advance is short-term money you borrow and repay quickly. The term covers several different products, and the costs vary a great deal between them. This guide explains each in neutral terms.

The Payday Loan Times is an independent news archive. We are not a lender and do not arrange advances, and nothing here is financial advice.

Three kinds of cash advance

Payday cash advance: a small, high-fee loan due on your next payday. See Payday Loans Explained.
Credit-card cash advance: cash withdrawn against your card's credit line. Typically charges an upfront fee plus a higher interest rate than purchases, with interest starting immediately (no grace period).
Employer / earned-wage advance: early access to wages already earned, sometimes offered at low or no cost.

Comparing the cost

Payday cash advances carry the highest effective APR (often around 400%). Credit-card cash advances are expensive too, but usually less so. Employer advances are generally the cheapest. Always compare the total dollars repaid and the APR.

Lower-cost alternatives

Consumer advocates commonly suggest checking a credit-union small-dollar or payday-alternative loan, a hardship plan with the biller, non-profit credit counseling, or local assistance before taking a high-cost advance.

Frequently asked

What is the difference between a cash advance and a payday loan?

A payday loan is one type of cash advance — the short-term, high-fee kind due on payday. "Cash advance" also covers credit-card advances and employer paycheck advances, which are priced differently.

How much does a credit-card cash advance cost?

Usually an upfront fee (a percentage of the amount) plus a higher interest rate than purchases, with interest accruing immediately. Check your card's terms for the exact numbers.

Is a cash advance a good idea?

It depends on the type and your situation, and it is not something we advise on. Lower-cost alternatives often exist; compare the total cost and APR before borrowing.