Credit Card Cash Advances in Canada: Limits, Fees and Interest

A cash advance is cash, or something treated like cash, drawn on a credit card instead of a purchase. It costs more than a purchase in three ways: a fee on each advance, a higher interest rate, and interest that starts on the day you take the money, with no interest-free period. This page covers what counts as a cash advance, how the limits work, what one costs, and the alternatives. It is part of our credit card basics guides.

What counts as a cash advance

The Financial Consumer Agency of Canada (FCAC) lists the main forms: taking out cash at an ATM with the card, or getting cash from a financial institution. Issuers also treat some transactions as “cash-like” and charge them the same way. FCAC names:

Other transactions, such as buying cryptocurrency or some person-to-person transfers, can be coded as cash-like by some issuers and not others. FCAC’s advice is to “Check your credit agreement or contact your financial institution to find out if they consider your purchase as a cash-like transaction.”

Cash advance limits

Most cards set a separate cash advance limit inside the overall credit limit, and it is often lower than the full limit. The amount appears on your statement, in the issuer’s app or in the cardholder agreement. A cash advance also draws on the credit limit like any balance, so a large advance raises your credit utilization the same way a purchase would. ATM withdrawals are also subject to the machine’s own per-withdrawal cap; ATM withdrawal limits covers those for bank debit cards.

What a cash advance costs

The fee

FCAC says the fee charged each time can be “a fixed amount per cash advance a percentage of the amount of the cash advance a fixed amount plus a percentage of the cash advance”, and “Some financial institutions set a minimum and a maximum amount for those fees.” The exact fee is in the card’s agreement and on the issuer’s fee schedule. A withdrawal at another bank’s ATM can add that machine owner’s charge. Outside Canada, FCAC notes, “The fee for a cash advance outside of Canada is typically higher than it is in Canada,” and a currency conversion charge can apply as well.

The interest rate

“The interest rate for cash advances is usually higher than for regular purchases,” FCAC says. A few cards’ published rates, from our card data:

A low purchase rate doesn’t always mean a low cash advance rate, so the two are worth checking separately. What counts as a good credit card interest rate compares rates by card type.

Interest from day one

The interest-free grace period doesn't apply to cash advances, cash-like transactions and balance transfers. Interest on a cash advance starts accruing from the transaction date. FCAC puts it plainly: “There is no interest-free grace period with cash advances. You’ll pay interest from the date you get a cash advance until you pay it back in full.” How credit card interest works explains the grace period that purchases get and advances don’t.

Paying the advance off quickly matters more than usual for one more reason: FCAC notes that the minimum payment typically goes to the part of the balance with the lowest rate. On a card carrying both purchases and an advance, paying only the minimum can leave the advance, the most expensive part, until last. Minimum payments explains the allocation rules.

A worked example

The fee is charged up front whether you repay in a day or a month, so a short advance costs proportionally more than the interest rate alone suggests. Fees and rates differ by card; the credit card fees guide lists the other charges a card can add.

When a cash advance might be justified

Some situations leave few other options: an emergency where only cash works and no other credit is available, or a sudden cost while travelling with no access to a debit card. For everyday expenses between paycheques, the cost compounds month after month, and a planned option is usually cheaper. Taking a cash advance to pay another debt adds a more expensive debt on top of the old one.

Cheaper ways to borrow

FCAC’s own suggestion is to “Consider a personal loan or line of credit” before a cash advance. The common alternatives:

• A line of credit. Usually a much lower rate than a card’s cash advance rate, and interest only on what you draw; line of credit vs credit card compares the two and line of credit rates lists current ones.
• A personal loan. Fixed payments over a set term; personal loans compares lenders.
• Overdraft protection on a chequing account, which has its own fees and interest.
• Savings or an emergency fund, which costs nothing to use.

A payday loan usually costs far more than a cash advance. If cash advances are covering regular bills, how to get out of credit card debt sets out the options for paying the balance down.

Cash advances and your credit score

A cash advance isn’t reported to the credit bureaus as a separate type of transaction; it shows up as part of the card balance. The effects come from the higher balance and from any payment that’s late as a result; what happens if you miss a credit card payment covers the second.