How do the costs compare?
| Amount, repaid in 14 days | Payday loan at $14 per $100 | Cash advance at 22.99% plus a $5 fee |
|---|---|---|
| $300 | $42 | About $7.65 |
| $500 | $70 | About $9.41 |
| $1,000 | $140 | About $13.82 |
Cash-advance interest is worked out as amount × rate × days ÷ 365. Rates and fees vary by card, and some cards charge a percentage fee instead of a flat one, so check your cardholder agreement. You can run your own numbers in our calculator.
How does a cash advance work?
You withdraw cash at an ATM with your credit card, or use a convenience cheque or balance transfer to your bank account. Unlike purchases, a cash advance has no interest-free grace period: interest starts the day you take the money, usually at a higher rate than purchases. Most cards also charge a fee per advance.
When is a payday loan the more expensive choice?
Almost always, for short periods. Even after a month, a $500 cash advance costs about $14 in interest and fees, compared with $70 for a single payday loan, and $140 if you take a second one to repay the first.
When could a cash advance cost more?
Only if you leave the balance on the card for a long time while paying only the minimum. Interest keeps adding up month after month. If you take a cash advance, treat it like a short loan: pay it off on the date you planned.
What if I don’t have a credit card, or it’s maxed out?
Look at the other options on our alternatives page: a pay advance from your employer, a credit union loan, overdraft protection or a payment arrangement on the bill itself. If none of those work and you do use a payday loan, borrow the smallest amount and check the lender’s licence first.