A Discover cash advance will set you back a lot, unfortunately. For starters, there’s the standard Discover cash advance fee: $10 or 5% of the transaction amount, whichever is larger. All Discover credit cards have that. And the same is true of Discover’s cash advance APR: 27.24%. That’s standard too.
When you do a cash advance with a Discover card, you don’t get any time to pay off what you owe before interest kicks in. With a normal purchase, if you pay in full by the due date, you don’t pay any interest. But with cash advances, the interest rate applies immediately and interest compounds daily. That means interest applies to both your balance and previous days’ interest. So it’ll build up very quickly.
To do a cash advance with your Discover card, you’ll first need to request a PIN by calling the number on the back of your card. You’ll get it in 7-10 days and then will be able to use your card at ATMs. That’s pretty much all you need to know about how to do a cash advance. But it might be helpful to go into a little more depth about the fee and interest process, and how the cost builds up.
Let’s do a quick example of how a Discover cash advance works. Say you do a $300 cash advance. Add on a 5% fee, and you start out owing $315 (assuming there are no ATM fees). If you take even just 1 month to pay that back, you’re paying around $7 in interest. Assuming you make the same payment every month, taking 6 months will cost you around $25, and a year will be about $48. So as you can see, it’s in your best interest to pay things off as quickly as possible.
In addition to you being charged large fees and interest, your relationship with Discover may suffer. In particular, it might be harder to get a credit limit increase in the future. So it’s best to never take out a cash advance unless that’s your only choice. And if you’re ever in that situation, paying back what you owe as quickly as possible is crucial.