What term describes withdrawing money from an ATM using a credit card, effectively a short-term loan?

• A. Cash Advance
• B. Credit Card Debt
• C. Grace Period
• D. Annual Fee

Answer: (A)

Withdrawing cash from an ATM on a credit card is a cash advance. It’s treated as a short-term loan taken against your credit line, issued by the card issuer specifically for cash withdrawals. Unlike regular purchases, cash advances start accruing interest immediately—there’s typically no grace period—and they often come with a cash-advance fee plus a higher APR. The amount you withdraw also reduces your available credit right away.

Other terms describe different aspects: “Credit card debt” refers to your overall outstanding balance, not the act of taking cash; “grace period” is the time after a billing cycle during which you can pay purchases without interest, which doesn’t apply to cash advances; and “annual fee” is a yearly charge for having the card, not tied to cash withdrawals.