A cash advance fee is a charge applied when you withdraw cash using a credit card. It is separate from the high interest rates that also apply to cash advances.
How It’s Calculated
The fee is usually either a flat amount (for example, $5 per transaction) or a percentage of the cash advance (commonly 3% to 5%), whichever is greater. This fee is added to your balance immediately.
Why It Matters
- Extra cost: The fee adds to the already expensive nature of cash advances, which have higher interest rates and no grace period.
- Immediate impact: Since it’s charged upfront, the fee increases your balance even before interest is added.
Final Thoughts
Cash advance fees make this form of borrowing one of the most expensive options available. They should be avoided whenever possible, except in emergencies.