Do cash advances hurt your credit score?

Question

You can get cash from a credit card through rewards redemption or by doing a cash advance. Rewards are the better option because they actually save you money. Cash advances have very high fees and interest, so they’re more of a last resort than anything else. If you do get one, you’ll want to pay it back as quickly as possible.... read full answer

Here’s how to get cash from a credit card:

Earn and redeem rewards: There are lots of cash back credit cards. Typically, they’ll give you at least 1% cash back on all purchases, and sometimes higher rates on specific categories of purchases.

Do a cash advance: You can make an ATM withdrawal with your credit card to turn some of your available credit into cash. You just need to get a PIN from the card’s issuer. You can withdraw up to the “cash advance limit” listed on your statement. But cash advances are expensive – you can expect a hefty fee and a high APR that starts costing you right away. There’s no grace period.

You can also get cash from a bank branch by presenting your credit card and a government-issued photo ID to the bank teller, or with a cash advance check sent to you either automatically by the issuer or by your own request.

Store credit cards generally do not allow cash advances.

At the register: Some credit cards don’t work like this, but the Walmart® Store Card, for example, allows you to withdraw up to $20 each time you make a purchase at a Walmart store location. This is also treated as a purchase, not a cash advance.

So, cash advances are not an attractive option, but there are a ton of attractive cash rewards credit cards on the market.

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Answer 1 · 2020-04-06 19:38:41

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Sydney Garth, Credit Cards Moderator

@sydneygarth • 04/06/20 This answer was first published on 04/06/20. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.

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Taking out a cash advance has no direct impact on your credit or credit score unless this operation leads to a credit utilization of more than 30-40%.

Just remember that cash advances are very expensive, ultimately causing you to pay much more money ( through fees and interest rates) than you initially withdraw.

Answer 2 · 2016-06-15 20:45:38

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Robert Wilson, Financial Advisor

@RobertWilson1 • 06/15/16 This answer was first published on 06/15/16. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.

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Yes, when you get a lot of cash advance it is a sign to creditors that you do not have the cash flow to pay your current obligation. They will look at you as a risk and not advance new credit.

Answer 3 · 2022-08-11 20:24:27

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Lauren Smith, WalletHub Staff Writer

@laurenellesmith • 08/11/22 This answer was first published on 08/11/22. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.

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No, cash advances do not hurt your credit score. Cash advances are not listed on your credit report and your credit score is calculated using the contents of your credit report. As a result, withdrawing cash from a credit line does not have a direct impact on your score.

Still, when you borrow cash from a credit card issuer, there are indirect implications for your credit and overall financial health.

How Cash Advances Can Indirectly Hurt Your Credit

Expensive interest and fee

Cash advances accrue interest immediately. The average APR for a cash advance is 22.53%, and the average transaction fee is approximately 3.84%.

Higher credit utilization

To safeguard your credit score, your credit utilization rate should remain under 30%. If a cash advance pushes you over the 30% threshold, or higher above it than you already are, it will lower your score.

Missed Payments

If you borrow cash from your card issuer because of a lack of income or spending power, you may be susceptible to missing payments in the future. Missed payments remain on your credit report for up to 7 years and have an adverse effect on your credit score.

At the end of the day, consumers should avoid cash advances due to the high cost. But if it’s absolutely necessary to borrow cash from a credit card company, you can find a list of the best cash advance credit cards right here.

Do cash advances hurt your credit score?

Sydney Garth, Credit Cards Moderator

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Robert Wilson, Financial Advisor

Lauren Smith, WalletHub Staff Writer

How Cash Advances Can Indirectly Hurt Your Credit

Expensive interest and fee

Higher credit utilization

Missed Payments

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