Ultimate Cash Advance Guide: How It Works, How to Get One, and How it Affects Your Credit

A cash advance is a short-term loan that allows you to borrow a small amount of money when you’re short on cash. There are various types of cash advances, including credit card cash advances, payday loans, advances from your bank or credit union, and cash advance apps. 

Cash advance apps are the newest option on the market. Their popularity is steadily increasing because they offer advantages over traditional cash advances like lower fees and no credit score impact. Let’s dive in and learn what the various types of cash advances—including cash advance apps—have to offer. 

What is a cash advance?

A cash advance is an unsecured loan that gives you the ability to access money without going through a formal loan process. 

Cash advances typically cover financial gaps between paychecks, especially when unexpected expenses pop up. For example, a cash advance might be used to pay for car repairs or medical bills.

How much you can borrow depends on the type of cash advance you opt for but the amounts tend to be relatively low, up to $1,000 maximum. 

Most cash advances must be repaid quickly, often by your next payday though this (and other terms) will vary depending on the cash advance type you use. 

How do cash advances work?

Cash advances are a quick way to borrow money when you’re in a tight spot. They’re designed to offer short-term financial relief by providing you with a small influx of cash that’s paid back on your next payday. 

The application process varies depending on which cash advance method you choose, but it’s usually fast and does not require a credit check.

How quickly you receive your cash also depends on the type of cash advance. With payday loans, you receive your money instantly but with apps, you may have to pay an additional fee for immediate access to funds. 

Repayment is automatic, with the amount owed withdrawn from your account the next time you get paid. 

Types of cash advances

Several different types of cash advances are available to consumers. Below are the most common types. 

Type	What to know
Cash advance apps	No interest, subscription or tip-based. Instant access to small amounts of money, typically repaid by next payday. Popular apps include Brigit, Dave, and Empower.
Credit card cash advances	Borrow against credit card limit with high fees (3% to 5%) and high interest rates (~10% higher than purchases). No grace period; interest accrues immediately.
Payday loans	Short-term, high-fee loan (up to $30 per $100 borrowed). Must be repaid by next payday. APR can reach 300% or higher, with risks of NSF fees.
Bank or credit union advance	Requires an existing account with the bank/credit union. Can be issued against a credit card or as a loan. Interest rates are higher than apps, with slower approval times.

Cash advance apps

A cash advance app is exactly what it sounds like: an mobile application that allows you to quickly borrow small amounts of money. Cash advances are short-term loans usually paid back on your next payday. Some of the most popular cash advance apps on the market include Brigit, Current, Dave, and Empower. 

These apps typically work on either a subscription or tip model, so they don’t charge interest on loans, though you may need to pay a fee for instant access to cash. They’re a great option when you’re short on funds but don’t want to fill out a loan application or endure a credit check.  

Credit card cash advances

A credit card cash advance allows you to borrow money against the available limit on your credit card. To do this, you can either withdraw cash from an ATM, go to a bank, or use a convenience check provided by your credit card company. You can typically borrow only 20% to 30% of your total credit limit, depending on your card issuer’s terms.

Most credit cards charge a fee for cash advances, roughly 3% to 5% of the amount borrowed. You’ll also pay a special interest rate on cash advances that’s higher than interest on purchases; the difference can be up to 10% higher. Plus interest will start to accrue as soon as you withdraw money with no grace period.

The high fees and interest on credit card cash advances add up quickly, which makes cash advance apps more appealing; with no interest or credit check required, they’re more accessible and budget-friendly than a credit card cash advance.

Payday loans

A payday loan is an expensive, short-term loan that’s often viewed as predatory lending. Payday loans allow you fast access to cash with loan amounts based on the size of your next paycheck (between 10% to 30% of your wages). You can apply for a payday loan in person or online with your pay stub, identification, and banking information.  

Instead of using interest rates, payday loans charge a set fee between $15 and $30 for every $100 borrowed. Loans must be paid back in full by your next payday. When you translate the high fees and short repayment period into an annual percentage rate (APR), the cost of a payday loan can skyrocket up to 300% and higher, so it’s best to consider alternatives.

Payday loans are repaid either through a pre-written check dated for your payday or an automatic withdrawal, which can lead to insufficient funds charges if your balance is low. Cash advance apps offer more flexibility; some apps allow you to set your own repayment terms or extend your due date up to three times.

Bank or credit union cash advance

You may qualify for a cash advance through your bank or credit union, provided you already have an open account. The loan could either be issued against a bank-sponsored credit card or as an installment loan, depending on the lender. This isn’t a widely offered feature, so check with your financial institution to see if a cash advance is available. 

Apps offer several advantages over cash advances through your bank or credit union. Financial institutions will likely charge high interest rates while cash advance apps typically charge no interest—they make money off subscriptions and/or tips. Getting cash through an app is also much easier because no formal application is required.

How cash advances affect your credit score

Cash advances can impact your credit score in several ways, depending on the type of advance and how you manage repayments.

Does a cash advance hurt your credit score?

Taking out a cash advance will not usually affect your credit score as long as you pay your loan back on time. None of the methods mentioned above require a credit check, and they don’t report advances to credit bureaus, so you don’t have to worry about your credit score being hit as long as loans are repaid.  

However, you may get into trouble if you don’t repay advances on time. Payday lenders and cash advance apps automatically withdraw the amount owed on the designated due date. If your balance doesn’t cover the payment due, you could face insufficient fund (NSF) fees. 

One NSF fee can easily start a chain reaction; other scheduled payments like utility bills, subscription services, and insurance premiums may then be rejected because of an insufficient balance. If companies report these late or rejected payments to credit bureaus, your credit score will likely go down.

Your credit score might also be lowered if you take out a credit card cash advance. Cash advances borrowed against your credit card increase what’s called your “credit utilization ratio.” This metric reflects what percentage of your credit limit is being used. When you use more available credit, your credit score decreases.

When do cash advances help your credit?

Out of the four types of cash advances discussed above, only two of them report to credit bureaus: credit card companies and banks/credit unions. If you take out a cash advance through your credit card and repay it on time, that reflects positively on your credit history. 

The same goes for a bank or credit union. Because they’re lending you money—even a small cash advance—they may report the activity to credit bureaus. By paying back the loan on time, you’re demonstrating creditworthiness, which will have a positive impact on your credit score. 

Since cash advance apps and payday lenders don’t report to credit bureaus, they won’t directly affect your credit. However, they could be beneficial in a roundabout way; if you have overdue bills, it’s better to cover them using a cash advance than have them turned over to a collection agency, which harms your credit. 

Are cash advance apps better than traditional cash advances?

Cash advance apps are clearly the best choice for people looking for convenience and lower fees. All you have to do is download the app, provide some basic information, and you can get the cash you need almost instantly. And since they work on either a subscription or tip model, the cost to borrow is minimal.

A credit card cash advance requires you to visit an ATM or bank to withdraw cash. Credit cards also charge a 3% to 5% fee for cash advances plus elevated interest rates on the amount that you borrow–up to 10% higher than the APR on standard purchases. 

Payday loans also fall short compared to cash advance apps. While some payday lenders are available online, most require an in-person visit to fill out paperwork. Plus you pay $15 to $30 for every $100 you borrow, which equals an APR of more than 300%, much higher than what you’d pay to borrow from a cash advance app.

Pros

• No interest

  Cash advance apps rely on a tip or subscription-based model, which means you don’t pay the high APRs associated with payday loans and credit card advances.

• Convenience

  Cash advance apps allow you to borrow money from the comfort of your own home, instead of visiting an ATM, bank, or payday lender in person.

• Repayment flexibility

  Some cash advance apps let you set your due date or extend your repayment period.

• Additional features

  Many cash advance apps, like Albert and Brigit, come with additional features that help you better manage your finances.

Cons

• Borrowing limits

  You can only borrow small amounts through a cash advance app (around $100 to $500) which won’t cover larger financial needs.

• Payment model

  While tips and subscription fees are less expensive than the high rates and fees set by more traditional cash advance companies, they can add up over time.

• Overdraft potential

  Because repayment is scheduled automatically, you risk overdraft fees if your bank balance doesn’t cover how much you owe.

• Instant transfer fees

  Though you can get money quickly through cash advance apps, they typically charge an additional fee for instant transfers.

Compare cash advance options 

Understanding the pros and cons of different cash advance options can help you make a smarter choice when you need cash fast. Let’s compare traditional cash advance options to see how they stack up against cash advance apps. 

Credit card cash advance vs. cash advance app

Feature	Credit card cash advance	Cash advance app
Fees	3% – 5% fee	Usually no fees
Interest	Higher interest (~10% more than purchases)	Typically no interest
Effect on credit score	Can lower credit score due to increased utilization	No direct impact on credit score (no reporting to credit bureaus)
Convenience	Requires a visit to ATM or bank	Fully digital, can be done from home

When you compare a credit card cash advance to using a cash advance app, the latter comes out ahead. When you borrow cash against your credit card, you’re charged a 3% to 5% fee plus interest that’s usually around 10% more than what you’d pay for purchases. That adds up quickly, especially since there’s no grace period for cash advances. 

Credit card cash advances can also have a detrimental effect on your credit score. The more you borrow, the higher your credit utilization ratio. This metric helps determine your credit score by measuring your debt versus your total credit limit. Carrying a higher balance on your credit card will drive your credit score down.  

Cash advance apps also win in the convenience department. With an app, all you have to do is download it, type in your information, and then request the funds–which can all be done from the comfort of your own home. A credit card advance requires that you visit either an ATM or bank to get your cash. 

Payday loan vs. cash advance app

Feature	Payday loan	Cash advance app
Fees	$15 – $30 per $100 borrowed (300% – 600% APR)	Subscription fee or optional tip
Interest rate	Very high APR	Typically no interest
Repayment terms	Must be repaid by next payday	Flexible due dates, some allow extensions
Convenience	In-person visit required for approval	Fully digital, instant response

The most obvious difference between payday loans and cash advance apps is the fees they charge. Fees on payday loans run between $15 to $30 per $100 borrowed, which translates into an APR of 300% to 600% and up. Cash advance apps are more affordable; you either pay a subscription fee or give an optional tip. 

Payday loans don’t offer much flexibility on repayment terms; they must be repaid on your next payday. Though many cash advance apps use the same framework, there are several that allow you to choose your own due date. Some cash advance apps even let you extend your loan up to three times, giving you more time to repay. 

Bank or credit union cash advance vs. cash advance app

Feature	Bank/credit union	Cash advance app
Interest rates	Lower than payday loans or credit cards, but higher than apps	Typically no interest
Approval time	Several business days	Instant approval
Requirements	Existing account, strong credit, more documentation	Less strict, minimal documentation
Convenience	In-person visit, slower approval process	Fully digital, instant response

While banks and credit unions offer lower interest rates than credit card advances or payday loans, they’re still higher than what you’d pay through a cash advance app. But the biggest difference between borrowing from a traditional financial institution versus a cash advance app is convenience.

To borrow from a bank or credit union, you’ll need to visit in person, fill out an application, then wait several business days for approval. This isn’t nearly as convenient as applying through an app and getting an instant response. Banks also have stricter qualifications, such as requiring an existing account, strong credit history, and more documentation.

How to choose the best cash advance option for your needs 

With so many cash advance options available, it can be challenging to figure out which one will best meet your needs. Check out the chart below to help you make your decision:

Option	Best for
Cash advance app	Borrow small amounts quickly with no interest or credit check; most convenient and flexible option
Credit card advance	Fast access to cash with flexible repayment but high interest rates and fees
Payday loan	Use only for emergencies if no other option available; balance due on next payday with high fees
Bank or credit union loan	Larger amounts, no rush, lower interest rates

If you’re still unsure which cash advance option to choose, ask yourself the following questions:

How much money do I need?

If you only need to borrow a small amount, a cash advance is likely your best bet. For larger amounts, consider a credit card cash advance or a bank loan.

How quickly do I need the cash?

If you need the money immediately, the top options would be a cash advance app, credit card advance, or payday loan; borrowing from a bank or credit union takes several days to process. 

How soon can I repay the loan?

If you can repay the loan on your next payday, a cash advance app is the best option. You could also opt for a payday loan, but the cost of borrowing will be higher. If you need more flexible repayment terms, either choose an app that allows you to set your own due date, borrow against your credit card limit, or take out a bank loan.

Am I concerned about fees and interest rates?

If you’re concerned about the high cost of borrowing, it’s a good idea to avoid payday loans; the fees they charge equal APRs of 300% to 600% and higher. The least expensive way to borrow is through cash advance apps.

Will this affect my credit score?

If you’re concerned about protecting your credit score, cash advance apps stand out as your best option; there’s no credit check required to borrow funds and they don’t report activity to credit bureaus. Payday loans also don’t require a credit check, but it’s easier to fall into a cycle of debt because of their high fees. 

Considering these factors will help you make a more informed decision about which cash advance option is right for you. 

Alternatives to a cash advance

Before you take out a cash advance, evaluate these alternatives to determine whether one is the right option for your situation.

Emergency fund

Building an emergency fund is one of the best alternatives to a cash advance. Setting aside a small amount of money each month allows you to create a cushion that helps cover unexpected expenses without relying on high-cost borrowing. Even if you start small, gradually building up to cover three to six months’ worth of expenses can provide peace of mind and financial flexibility.

Personal loan

A personal loan may cost less than a cash advance in the long run, especially if you have good credit. 

It provides a lump sum you can repay over a set period with fixed monthly payments. This option can be more manageable than a cash advance, particularly for larger expenses or if you need more time to repay.

Borrow from friends or family

If you have a trusted friend or family member willing to lend you money, this can be a quick and interest-free alternative to a cash advance. Be sure to discuss and agree on repayment terms upfront to avoid misunderstandings or strained relationships. This can be a solid option for small amounts you need quickly.

Responsible credit card use

Using a credit card responsibly, such as only spending what you can pay off in full each month, can help you manage short-term financial needs. 

Many credit cards offer a grace period for no interest on purchases, provided the balance is paid in full by the due date. This can be a cost-effective alternative to a cash advance if managed carefully.

FAQ

Are cash advance apps safe to use?

Yes, cash advance apps are generally safe to use if you choose a reputable app and take precautions to protect your personal information. Look for apps with strong encryption, positive user reviews, and clear privacy policies. Only download apps from trusted sources, such as the Apple App Store or Google Play.

How much can I borrow with a cash advance app?

The amount you can borrow from a cash advance app varies depending on the app and your financial profile. Most apps offer advances in various amounts—$5, $20, $50, and up to $500. Some offer up to $1,000 or more. The amount you can borrow may depend on your income, banking history, and how much you’ve repaid in the past.

Do cash advance apps have hidden fees?

Most cash advance apps are transparent about their fees, but it’s important to read the fine print. While many apps don’t charge interest, they may have fees for instant access, monthly subscriptions, or optional tipping. Understanding these costs upfront can help you choose the best app for your needs without unexpected charges.

What happens if I don’t repay a cash advance?

If you don’t repay a cash advance on time, you could face several consequences, including additional fees, restricted access to future advances, and negative marks on your financial profile with the app. While most apps don’t report to credit bureaus, failure to repay may impact your ability to use the app in the future or could lead to overdraft fees if linked to your bank account.

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