Does taking a cash advance hurt your credit score?

Not by itself. A credit report shows your card's balance and payment history rather than a list of individual transactions, so a cash advance doesn't appear as its own item. It still raises your balance, which raises your credit utilization. The damage comes from missing payments on it.

How much can I take as a cash advance?

Less than your credit limit. Issuers set a separate, lower cash limit that covers cash advances, balance transfers and convenience cheques together, and CIBC counts the accrued interest on those toward it as well. On many cards it's a few hundred dollars. Your statement or app shows the number.

If I pay it back the next day, do I avoid the interest?

You avoid most of it, not all. You still owe interest for the days you held the money, and the fee stands whatever you do. At CIBC and Scotiabank the fee itself is charged interest from the day it's posted, so a same-week repayment on a small advance is mostly the fee.

Is this the same thing as a cash advance app?

No. A cash advance app like Bree or Nyble advances you money against your next paycheque and charges no interest, and it has nothing to do with your credit card. The costs work completely differently, which we break down in cash advance apps in Canada .

What Is a Cash Advance on a Credit Card in Canada?

A cash advance is money you take out of your credit card instead of buying something with it. Cash from a bank machine is the obvious one. Paying a bill through online banking from your card, or sending a money transfer, usually counts too.

Two costs stack on top of each other. There’s a fee, charged the moment the transaction goes through. And unlike a purchase, a cash advance gets no interest-free period at all, so interest runs from the day you take the money, at a rate higher than the one on your purchases.

Below is what counts as a cash advance in Canada, what the big banks charge for one, and the payment rule that decides how long you end up carrying it.

What counts as a cash advance?

Any time you take cash off your credit card, or something close to cash, your bank treats it as a cash advance. Withdrawing at a bank machine or a teller is the clear case. So are money transfers, money orders, travellers’ cheques, casino chips and lottery tickets, which the Financial Consumer Agency of Canada (opens in a new tab) lists as cash-like transactions.

The ones people don’t expect

The surprises are the transactions that feel like ordinary banking. CIBC’s cardholder agreement (opens in a new tab) defines a cash advance to include bill payments made at a branch, at a bank machine, or through telephone, mobile or online banking, along with funds transfers out of the account. Pre-authorized debits you set up directly with a merchant are usually treated as purchases, so the same bill can go either way depending on how you pay it.

RBC adds foreign and virtual currencies (opens in a new tab) to its list, so buying crypto with a credit card lands in the same bucket, as do online casino bets and transfers from a card into a bank account.

Convenience cheques, access cheques and balance transfers get the same treatment at every major issuer: same rate, same missing grace period, usually the same fee.

What does a cash advance cost in Canada?

You pay in two places. The fee is charged on the spot and runs about $5 on a typical withdrawal in Canada. The interest rate sits a point or two above your purchase rate, and it starts the day the money leaves.

CIBC and Scotiabank each publish one fee schedule covering their whole personal card lineup:

Bank	Fee in Canada	Fee outside Canada
CIBC	$5.00, none in Quebec	$7.50
Scotiabank	$5.00 or 1%, whichever is more	$7.50

RBC and TD set the fee per card instead, so yours is in the disclosure that came with it. One current RBC information box (opens in a new tab) puts it at $3.50 in Canada and $5.00 outside.

Two conditions sit behind all of these. Scotiabank drops the foreign fee to $5.00 (opens in a new tab) at a Global ATM Alliance bank. And the owner of the machine can add a surcharge of its own on top of whatever your bank charges.

The rates follow the same shape. CIBC’s current rate sheet (opens in a new tab) puts most of its personal cards at 21.99% on purchases and 22.99% on cash advances. The RBC box above shows 19.99% and 21.99%. FCAC uses 19% and 22% as its illustration.

The fee gets charged interest too

CIBC’s agreement says cash advance fees are treated the same as cash advances when interest is calculated, so interest runs on the fee from the day it’s posted. Scotiabank says the same: there’s no interest-free grace period on cash advances, including on any fees that apply to them.

So a $500 advance at 22.99% with a $5 fee costs roughly this, depending on how long you hold it:

How long you carry it	Interest	Fee	Total
1 week	$2.23	$5.00	$7.23
1 month	$9.54	$5.00	$14.54
3 months	$28.63	$5.00	$33.63
1 year	$116.10	$5.00	$121.10

Why is there no interest-free period on a cash advance?

Because the grace period only ever covered purchases. CIBC and RBC both give you at least 21 days from your statement date to pay for a purchase without interest. Neither extends that to cash advances, and FCAC says the same thing for the industry: you pay interest from the date you take a cash advance until you pay it back in full.

Paying your statement in full on the due date doesn’t undo it. The days between the withdrawal and the payment have already been charged, and they show up on the following statement.

Why your payment clears the cash advance last

This is the rule that keeps a small cash advance on a card for months, and almost nobody knows it. FCAC’s guidance on paying off your credit card (opens in a new tab) says your minimum payment typically applies to the portion of your balance with the lowest interest rate. Only the amount above the minimum reaches the expensive part, and even then your issuer picks one of two methods: the highest-rate balance first, or proportionally across the whole balance.

Say you’re carrying $2,000 in purchases and you take a $500 cash advance. The advance is 20% of what you owe. If your bank allocates proportionally, an extra $250 payment puts about $50 against the advance and the rest against the purchases. You can’t tell the bank to pay the advance off first.

Quebec works differently

Quebec is the exception to most of this, and the differences run in the cardholder’s favour.

Payments go to any required installment plan payments first, then to the highest-rate debt, then down the rates from there. RBC notes that this order is set by law in Quebec rather than left to the bank. CIBC charges Quebec residents no cash advance fee at all, and applies the purchase rate of 21.99% to advances instead of 22.99%. And Quebec’s Office de la protection du consommateur (opens in a new tab) sets a minimum monthly payment of at least 5% of the balance, which is more out of pocket each month and less carried over.

What to reach for before a cash advance

A cash advance isn’t the worst thing you can do. A payday loan is worse, and the fee on a $200 withdrawal you clear in a week is genuinely small. It’s just rarely the cheapest thing available, so it’s worth going down the list first.

Money you already have, including savings you’d rather not touch. Moving $300 across and putting it back next payday costs nothing.
Overdraft on your chequing account, if the flat fee is smaller than the advance fee plus interest. We compare those charges in NSF and overdraft fees in Canada.
A line of credit, which almost always carries a lower rate than any credit card and has no cash advance fee.
A free-tier cash advance app, which charges no interest at all when you can wait the standard delivery time. The catches are in cash advance apps in Canada.
The credit card advance, when the amount is small and payday is close.

If you’re weighing more than one of these, best loan apps in Canada prices the whole ladder from cheapest to most expensive.

Why a few hundred dollars changes the answer

Every option above turns on the same thing: whether you have money of your own to reach for. A couple of hundred dollars sitting in a savings account is the difference between a fee plus interest and no transaction at all. That’s the entire reason an emergency fund gets recommended so relentlessly, and also why it’s so hard to build, since you get nothing out of it until the week you need it.

Lodavo was built to change that part. It’s a free Canadian app that connects read-only to the bank account you already save in, and every $25 you save earns you a free ticket in a weekly cash draw. At least $100 goes to a Lodavo user every week and the top prize is $10,000. Your savings do the same job they always did, and now the weeks you never touch them are worth something.

Before you take one

Check what your own card charges before you assume it’s $5. The number is on your statement, in your banking app, and in the disclosure that came with the card, and it varies more between issuers than most people expect. If the advance is small and you can clear it inside a week, the cost is close to the fee. If it’s going to sit there, the missing grace period and the payment allocation rule will keep it sitting there longer than you planned.

Ready to make saving worth something before you need it? Download Lodavo free on the Apple App Store (opens in a new tab) or Google Play Store (opens in a new tab) and start earning tickets for the weekly draw.

Terms and conditions apply. No purchase necessary (alternate method of entry available). Skill-testing question required. Open to legal residents of Canada who are the age of majority. Odds depend on the number of eligible entries received. Full rules and odds at our contest rules.