Enter the desired withdrawal amount, the number of periods (months), and the final charge or amount paid for the cash advance to calculator the cash advance interest rate.

## Cash Advance Interest Formula

The following equation is used to calculate a cash advance interest rate.

I = P / AW * 100 / m

- Where I is the cash advance interest (%)
- P is the final amount paid.
- AW is the cash taken out at the time of withdrawal.
- m is the number of periods or months.

The variable m represents the number of periods or months.

AW refers to the amount of money that is physically obtained at the moment of making a withdrawal from a bank account or financial institution.

P is the total sum of money that is ultimately paid or owed.

## Cash Advance Interest Definition

Cash advance interest refers to the interest charged on a cash advance taken from a credit card. When a cardholder withdraws cash from an ATM using their credit card, the credit card issuer typically charges a higher interest rate on that amount compared to the interest rate for regular credit card purchases. This is because cash advances are considered riskier for the credit card issuer, as they are not backed by any collateral and are seen as a form of borrowing money.

The cash advance interest rate is usually higher than the regular purchase interest rate and can vary depending on the credit card issuer and the terms of the card agreement. In addition to the higher interest rate, cash advances may also be subject to additional fees, such as a cash advance fee or ATM withdrawal fee. It is important for cardholders to carefully read and understand their credit card agreement to be aware of the specific terms and conditions regarding cash advances and the associated interest rates and fees.

## Cash Advance Interest Example

How to calculate cash advance interest?

**First, determine the initial withdrawal.**Determine how much cash was initially withdrawn or taken out as credit.

**Next, determine the total number of periods.**Determine the number of months before the credit or cash advance is paid off.

**Next, determine the total amount paid.**Calculate the final amount paid for the cash advance.

**Finally, calculate the cash advance interest.**Calculate the interest using the equation above.

## FAQ

**What is cash advance?**

A cash advance is a credit or loan taken out in advance of payment of that cash using an interest rate.