Does Cash App Do Cash Advances or Loans?

Cash App has become a widely recognized financial application, serving millions of users across the United States. With its broad reach, many individuals frequently inquire whether the platform offers traditional cash advances. A traditional cash advance is a short-term loan from a credit card issuer or payday lender, often with high fees and immediate interest. Understanding Cash App’s offerings requires distinguishing between these conventional borrowing methods and its features.

Cash App and Traditional Cash Advances

Cash App does not provide traditional cash advances like payday lenders or credit card issuers. While users can link a credit card to their Cash App account to send money, Cash App imposes a 3% fee for such transactions. Credit card companies generally categorize these as cash advances, triggering their own fees (typically 3-5% or a minimum, such as $10). These transactions also often incur a higher Annual Percentage Rate (APR) that begins accruing interest immediately, without a grace period.

This highlights that using a credit card on Cash App for sending money is treated by credit card issuers as a costly cash advance, not a standard purchase. Cash App’s internal borrowing option is a short-term loan product. These are separate financial mechanisms, each with its own fee structure and implications.

Understanding Cash App’s Borrow Feature

Cash App offers a “Borrow” feature, providing small, short-term loans to eligible users. This service is facilitated through Square Financial Services, Block’s FDIC-approved banking arm. The “Borrow” feature is currently in a testing or pilot phase, and is not universally available to all users. Availability depends on several factors, including the user’s state of residence, with the feature presently accessible in approximately 19 states.

Eligibility considers a user’s activity within the app, such as consistent use of the Cash Card, a history of direct deposits, and overall account behavior. Users must be at least 18 to qualify. Loan amounts typically range from $20 to $400, though some users have reported higher limits based on their account history and responsible repayment practices.

A flat 5% fee is applied to the borrowed amount, which is due with the principal within four weeks of loan origination. If repayment is missed, a one-week grace period is often provided. After this grace period, an additional 1.25% weekly interest rate or finance charge may be applied to the outstanding balance until the loan is fully repaid. This fee structure can result in a high effective APR, potentially reaching 60% for a four-week loan or even 260% if repaid in one week. Repayment options include a single lump sum, weekly installments, or automatic 10% deductions from incoming direct deposits. Funds are automatically debited from the Cash App balance or linked debit card if payment is not made on time.

Accessing Funds and Payments with Cash App

Beyond its borrowing feature, Cash App provides various functionalities for managing funds, distinct from loans. Users can establish direct deposit to receive paychecks, government benefits, or tax refunds directly into their Cash App balance. This service can make funds available up to two days earlier than traditional banks. Direct deposits can be substantial, with limits up to $25,000 per deposit and $50,000 within a 24-hour period. Setting up direct deposit typically requires an activated Cash Card.

The platform also facilitates instant transfers from a linked bank account to the Cash App balance, or from the Cash App balance to an external bank account. While standard transfers to a bank account are free and may take one to three business days, instant transfers usually incur a fee ranging from 0.50% to 1.75%.

Cash App’s core functionality includes peer-to-peer (P2P) payments, allowing users to send and receive money instantly, often without fees. Users can initiate these transfers using a $Cashtag, email address, or phone number.

Furthermore, the Cash Card, a customizable Visa debit card, is directly linked to a user’s Cash App balance. This card enables users to spend their funds anywhere Visa is accepted, providing a convenient method for accessing and utilizing their money for everyday transactions. These features offer diverse ways to manage liquidity without borrowing.