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Credit Card Cash Advance: What It Is & How to Obtain It

Updated: Dec 6, 2023


what is credit card cash advance

Are you considering a cash advance on your credit card? It might seem like a quick and easy way to get access to money in a pinch, but it's important to understand the costs and implications before you take the plunge.


In this article, we'll cover everything you need to know about credit card cash advances, from how they work to the fees involved. We'll also explore alternatives to consider that might be more beneficial to your long-term financial health. By the end of this article, you'll have a better understanding of whether a credit card cash advance is the right choice for you.


Table of Contents:

- What is a cash advance?

- What are the types of cash advances?

- How to get a cash advance from a credit card

- How much does a cash advance cost?

- How do I apply for a cash advance?

- What do I need to apply for a cash advance?

- Cash advance terms and fees

- When to consider using a cash advance

- Things to consider before taking a cash advance

- Benefits of a cash advance

- Quick access to cash

- Potentially lower cost than other options

- Easy application process

- Find the right card for your needs


What is a cash advance?

When an unexpected expense arises or you find yourself short on cash, a cash advance might seem like a quick and easy solution. But what exactly is a cash advance? Simply put, it's a short-term loan alternative that you can take out against your credit card balance or line of credit. It's a convenient way to access funds quickly, especially when you don't have cash on hand or access to a traditional loan. A cash advance can be useful in emergency situations, but it's important to understand how PTO cash advance works and the fees associated with it before deciding to take one. It's also worth considering financial employee benefits reducing burnout. Let’s explore the different types of cash advances available and how they work.


What are the types of cash advances?

When it comes to credit card cash advances, there are three main types: ATM cash advances, convenience check cash advances, and in-person cash advances.


ATM cash advances:

An ATM cash advance is when you use your credit card at an ATM to withdraw cash. This is similar to how you would withdraw money from a checking account using a debit card. However, instead of using money from your bank account, you're essentially borrowing money from your credit card company.


Convenience check cash advances:

A convenience check cash advance is when your credit card company sends you a check that you can use to withdraw cash. This check can be deposited into your bank account or cashed at a bank or check-cashing store.


In-person cash advances:

An in-person cash advance is when you visit a bank or credit union and use your credit card to withdraw cash. This type of cash advance can be useful if you need a large amount of cash that exceeds your ATM withdrawal limit or if you don't have access to an ATM.


How to get a cash advance from a credit card

As we mentioned earlier, there are a few ways to obtain a cash advance from your credit card, including online, at an ATM, or in-person at a bank or credit union. Here's what you need to know:


Online cash advances:

If your credit card issuer offers online banking, you may be able to request a cash advance online. Simply log in to your account and look for the option to request a cash advance. You will need to provide information such as the amount of money you need, the account where the funds should be deposited, and how you plan to repay the advance.


ATM cash advances:

To get a cash advance at an ATM, you will need to have a credit card PIN number for your credit card. Simply insert your card into the machine, select the cash advance option, and follow the prompts. Keep in mind that there may be a fee for using an out-of-network ATM, in addition to the cash advance fee.


In-person cash advances:

Some banks and credit unions offer in-person cash advances. To obtain one, simply visit a branch location with your credit card and a valid form of identification. The teller will process the cash advance and provide you with the funds. Keep in mind that some banks and credit unions may charge a fee for this service.


Convenience check cash advances:

If your credit card issuer sends you convenience checks, you can use them to obtain a cash advance. Simply fill out the check for the desired amount and deposit it into your bank account. Keep in mind that convenience checks often come with high cash advance fees and interest rates, so it's important to read the fine print before using them.


No matter how you obtain a cash advance from your credit card, it's important to understand the advance fees and interest rates associated with the advance.


How much does a cash advance cost?

While cash advances may seem like a convenient way to get quick cash, they come with a price. Generally, credit card companies charge a fee for each cash advance you take out, usually ranging from 2% to 5% of the total amount. In addition to this fee, there's usually a higher interest rate or cash advance APR associated with cash advances, which starts accruing immediately and can be as high as 25% or more.


It's important to note that some credit card companies may also impose a cash advance limit, which restricts how much you can withdraw in cash. This limit may be lower than your overall credit limit and can vary depending on your credit score and other factors.


To give you an idea of how much a cash advance can cost, let's say you take out a $500 cash advance with a 5% fee and 25% interest rate. You would pay a $25 fee upfront and accrue approximately $10 in interest charges in the first month alone. This means that by the end of the first month, you would owe $535, not including any additional fees or interest that may accrue over time.


Given these costs, it's important to carefully consider whether a credit card cash advance is the best option for your financial needs. If possible, explore other options like personal loans, lines of credit, a payday loan or a PTO cash advance before resorting to a credit card cash advance.


How do I apply for a cash advance?

Now that you know the terms and fees involved, you may be wondering how to apply for one. The process is typically pretty straightforward, and you can often complete it online from the comfort of your own home.


What do I need to apply for a cash advance?

To apply for a cash advance, you'll need to provide some basic information about yourself, your employment, and your bank account. The specific requirements may vary depending on the lender, but you can generally expect to provide the following:


  • Personal information: Your name, address, phone number, and email address.

  • Employment information: Your employer's name and contact information, your job title, and your length of employment.

  • Bank account information: Your bank's routing number and your account number.


You may also need to provide proof of income, such as a recent pay stub, and consent to a credit check. However, many cash advance lenders don't require a credit check, so even if you have bad credit or no credit history, you may still be eligible.


To be eligible for Sorbet cash advance, you need to be:

  • of legal age (18+)

  • a resident of a United States city where Sorbet is currently offered (Colorado, Florida, Illinois, Massachusetts, New York, New Jersey, Texas and Virginia)

  • a W-2-paying employee with a salary over $30,000

  • an individuals with accrued PTO days and a company policy that grants PTO carry-over and payout


Cash advance terms and fees

Before you apply for a credit card cash advance, it's important to understand the terms and fees involved. Cash advances typically have higher interest rates than other types of payday loans, and they may also come with additional fees, such as an origination fee or a late payment fee. Be sure to read the fine print and understand the total cost of the loan and whether or not there is a grace period for late payments before you accept the funds.


Additionally, be aware that cash advances are intended to be a short-term solution for financial emergencies, and they should not be used as a long-term financial strategy.


When to consider using a cash advance

While cash advances can be a useful tool for accessing money quickly, it's important to consider whether it's the right option for you. Here are some situations where you might want to consider using a cash advance:


  • Unexpected Expenses: If you're hit with an unexpected expense, like a car repair or medical bill, a cash advance could help cover the cost until your next paycheck.

  • Avoiding Late Fees: If you're facing a late fee on a bill or credit card payment, a cash advance can help you avoid the fee and keep your accounts in good standing.

  • Immediate Needs: If you have an immediate need for cash and don't have time to wait for your next paycheck, a cash advance can provide the funds you need quickly.


While cash advances can be a helpful option in certain situations, it's important to use them responsibly and only when necessary.


Things to consider before taking a cash advance

Before taking a cash advance, it's important to consider a few key factors to ensure that it's the right financial decision for you. Here are some things to keep in mind:


  • Cost: Cash advances often come with high fees and interest rates, so it's important to understand the cost of the advance before you apply.

  • Repayment terms: Make sure you understand the credit card agreement and repayment terms of the cash advance, including when it's due and what the consequences are for not paying it back on time.

  • Your financial situation: Think about whether taking a cash advance is the best option for your financial situation. Are there other ways you could cover your expenses?

  • Impact on your credit: Taking a cash advance could impact your credit score, so it's important to be aware of this and consider how it could affect your ability to borrow in the future.


By considering these factors, you can make an informed decision about whether a cash advance is the right option for you.


Benefits of a cash advance

A credit card cash advance can provide quick access to cash when you need it most. However, as we mentioned before, taking out a cash advance on your credit card can come with high fees and interest rates. That's where Sorbet comes in - as an alternative to credit card cash advances, Sorbet’s PTO cash advance solution offers several benefits that make it a more attractive option, especially for frontline workers living paycheck to paycheck.


Quick access to cash

One of the biggest advantages of a cash advance is the ability to get cash quickly. With Sorbet, you can apply for a PTO cash advance in just a few minutes and receive the funds as soon as the next business day. This can be especially helpful if you have an unexpected expense or need cash in a pinch.


Potentially lower cost than other options

While credit card cash advances can come with high fees and interest rates, Sorbet's PTO cash advance is a more affordable option. Sorbet offers extremely competitive pricing - plus, there are no hidden fees or monthly costs!


Easy application process

Applying for a cash advance through your credit card can be a hassle, with complex forms and lengthy approval processes. With Sorbet, you can apply online in just a few minutes, and receive a quick decision on your app.


Find the right card for your needs

When it comes to financial solutions, there's no one-size-fits-all option. Credit cards can be a good choice for some situations, but if you’re looking to unlock extra compensation and build credit without dipping into your pay check, the Sorbet Visa Card is an excellent alternative.


With Sorbet's PTO cash advance solution, you'll receive your funds on a prepaid Sorbet Visa Card. This card can be used like any other Visa card for purchases or cash withdrawals, providing you with flexibility and convenience. Additionally, you won't have to worry about any hidden fees or credit checks, making the Sorbet Visa Card a more attractive and cost-effective solution compared to traditional credit card cash advances.


Ultimately, the right financial solution depends on your individual needs and circumstances. Credit card cash advances may be a suitable option in some cases, but for boosting financial health and wellness, Sorbet may be a better choice. Interested in a Sorbet PTO Cash Advance? Apply now!


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