What is the interest rate on a cash advance?

The average APR for a payday cash advance is 400 percent.

Whether you get a cash advance as an online loan or as cash from your local currency exchange, these are a type of bad credit loan. Basically, they’re payday loans—they give you an “advance” on your next paycheck—which means that the kinds of rates you’ll be dealing with are higher.

For example, some payday lenders will advertise themselves as offering cash advance loans. But unlike the APRs in the 20-30 percent range that you’d see with a credit card cash advance, these payday loans have average APRs above 300 percent! That’s 10 times the cost!

It can be very hard to pay off a payday cash advance on time.

The payment terms for payday cash advances also tend to be very short, usually around two weeks. If you can’t pay back the loan with all of its fees and interest in that time, you might have no choice but to roll the loan over—paying extra money to extend the due date—or take out a new loan immediately after you pay the old one off.

Rolling over or reborrowing these cash advance loans can quickly lead you into a cycle of debt, where you are always extending the loan without ever getting out from under it. This will be bad for your credit score and your finances in general. And unlike with credit cards, payday loans are “no credit check loans,” which means they won’t report your payments to the major credit bureaus. Even if you do pay off the loan in time, you won’t get proper credit for it. Literally.

The APR on a credit card cash advance is likely to be higher than the rate for a traditional personal loan from a bank, but you may not qualify for a traditional bank loan depending what your credit score looks like. Taking out an advance on your card can be a reasonable option, though you’ll want to try to pay it back as quickly as possible to minimize the interest you’ll pay. One thing we can say for sure: the rates for credit card cash advances are way better than the rates for payday cash advance loans.

Apply now for a highly rated installment loan or credit product that could help you build your credit history.