How To Pay Back A Cash Advance On A Credit Card

To pay back a cash advance on a credit card, make a payment to your credit card account as soon as possible. A credit card cash advance usually starts charging interest right away, so the faster you repay it, the less interest you may pay.

Unlike regular credit card purchases, cash advances usually do not have an interest-free grace period.

KOHO (Payday Loan Alternative)

KOHO Cover is a payday loan alternative, you can:

• Get up to $250 as an instant cash advance (amount depends on eligibility)

• Pay no interest on the advance

• Avoid a credit check

• Repay automatically once you add money or get paid

You subscribe to the Cover bundle for a low monthly fee, and in return you get the advance feature plus extras like a credit report, financial coaching, and priority support.

How Credit Card Cash Advance Repayment Works

A credit card cash advance is added to your credit card balance. You repay it the same way you would repay the rest of your credit card balance.

You can usually pay it back through:

• Online banking

• Your credit card issuer’s app

• A bank transfer

• A bill payment

• An ATM payment, depending on your provider

• A branch payment, depending on your financial institution

Once your payment is processed, it reduces your credit card balance. However, interest may continue until the cash advance balance is fully repaid.

Pay It Back As Soon As Possible

The most important step is to repay the cash advance quickly.

The Government of Canada says different interest rates may apply to different credit card transactions, including purchases, balance transfers, and cash advances. Cash advances often have a higher interest rate than purchases.

Because interest usually starts immediately, waiting until your statement due date may cost you more. If you have the money available, it is usually better to make a payment right away instead of waiting for your next bill.

Pay More Than The Minimum Payment

If you only make the minimum payment, it may take much longer to repay your cash advance. This can increase the total interest you pay.

Your minimum payment keeps your account in good standing, but it may not reduce the cash advance balance quickly enough. If possible, pay more than the minimum or pay off the full cash advance amount as soon as you can.

Check How Your Credit Card Issuer Applies Payments

Credit card issuers may apply payments differently when your balance has multiple interest rates.

For example, your regular purchases may have one interest rate, while your cash advance may have a higher rate. The Financial Consumer Agency of Canada explains that different interest rates can apply to different parts of your credit card balance, including cash advances.

If you recently used a cash advance, check your card agreement or contact your credit card issuer to understand how your payment will be applied.

Watch For Cash Advance Fees

A credit card cash advance may come with a fee on top of interest. This fee may be a flat amount or a percentage of the cash advance.

The Government of Canada gives an example where a credit card cash advance includes a $5 fee plus a 23% annual interest rate on the amount borrowed.

This is why it is useful to repay the balance quickly and avoid taking another cash advance unless necessary.

Step-By-Step: How To Repay A Credit Card Cash Advance

Start by checking how much you borrowed, including any cash advance fee. You can usually see this in your credit card account or statement.

Next, check the cash advance interest rate. It may be different from your regular purchase rate.

Then, make a payment to your credit card as soon as you can. If possible, pay the full amount of the cash advance plus any fee.

After that, check your next statement to confirm the payment was applied and whether any interest remains. If you still see interest, pay the remaining balance as soon as possible.

Can You Repay A Cash Advance Before Your Statement Comes?

Yes, you can usually repay a credit card cash advance before your statement is issued. This may help reduce the amount of interest you pay because interest usually starts right away.

You do not need to wait for your statement if you already know how much you borrowed. You can make a payment through your usual credit card payment method.

What If You Cannot Pay It Back Right Away?

If you cannot repay the full cash advance immediately, try to pay as much as you can as soon as possible.

You may also want to avoid making new purchases on the card until the balance is under control. Adding more to the card can make repayment harder.

If the cash advance is part of a larger debt problem, consider contacting your credit card issuer to ask about repayment options. You may also want to speak with a non-profit credit counsellor if you are relying on cash advances often.

Alternatives To A Credit Card Cash Advance

A credit card cash advance can be fast, but it can also be expensive. Before using one again, compare other options.

You may want to consider:

• A payment extension from your bill provider

• Overdraft protection

• A line of credit

• A small personal loan

• Borrowing from family or friends with a clear repayment plan

• Selling something you no longer need

• Speaking with a credit counsellor if cash advances are becoming frequent

A line of credit or overdraft protection may cost less than a payday loan or repeated cash advances, depending on the fees, interest rate, and how quickly you repay.

Final Takeaway

To pay back a cash advance on a credit card, make a payment to your credit card account as soon as possible. Cash advances usually start charging interest right away and may have a higher interest rate than regular purchases.

If you can, pay the full cash advance amount immediately. If not, pay more than the minimum and reduce the balance as quickly as possible. The sooner you repay it, the less interest you may pay.