Australians are hooked on credit card cash advances
Withdrawals are at their highest levels in six years.
Australians are routinely withdrawing money on their credit cards, with new figures showing an alarming rise in the number of cash advances over the past six years.
In March 2016 one in seven credit card holders took cash from their credit accounts, tallying 2.3 million transactions, a level not seen since November 2010, according to RBA data analysed by creditcardfinder.com.au.
The number of cash advances in March 2016 was about 9% higher than a year earlier and has risen almost 20% over the last six years, equating to an additional 384,209 cash advances per month.
The overall amount Aussies withdrew in March was the highest it's been in a year, totalling $881.8 million. That's about $54 per card.
In the 12 months to March 2016, there were $9.7 billion in cash advances. Given the average credit card cash advance rate is about 19.49%, that’s an interest bill of $1.89 billion per year.
Cash advances represent about 1.1% of all monthly credit card transactions. The rise comes despite the fact that overall use of ATMs in Australia is declining.
There are many different credit card transactions that are considered cash advances and there are varying fees associated, depending on your bank. It's important to understand the interest rate structure and debate the pros and cons of cash advances.