How do low cash advance rate credit cards work?
While most credit cards have high cash advance interest rates, ranging from 19.99% p.a. up to 21.99% p.a., some cards offer lower interest rates that range from 8.99% p.a. to 18.99% p.a. for cash advance transactions.
This type of card could be useful if you need access to extra funds but can't use your credit card to make a payment. For example, if you're overseas or shopping somewhere that only accepts cash and you can’t use a debit card.
Other cash advance transaction costs
Even if you get a card with a low interest rate, you'll still have to pay a cash advance fee for these transactions. Cash advances also won't be eligible for any interest-free days your card may offer for standard purchases, which means interest will be charged from the time the transaction is made until it's paid off in full.
What transactions are counted as "cash advances" on a credit card?
A cash advance is usually any credit card transaction that lets you get cash or an equivalent to cash. This includes withdrawing money from an ATM, buying foreign currency, buying gift cards or gambling. Finder's guide on cash advance transactions has more details.
Compare credit cards with competitive cash advance rates
Cash advances are typically the most expensive transactions you can make with a credit card. So it’s ideal to avoid them as much as possible.
But if you're thinking of using your credit card for a cash advance and want to keep costs to a minimum, here’s a range of cards with competitive rates and fees.
|Credit card||Cash advance rate||Cash advance fee||Purchase rate||Annual fee|
|Bank Australia Low Rate Visa||9.39% p.a.||$3.50||9.39% p.a.||$59|
|Bank Australia Visa||12.39% p.a.||$3.50||12.39% p.a.||$0|
|Community First Low Rate Credit Card||8.99% p.a.||$5||8.99% p.a.||$40|
|Horizon Bank Visa||12.95% p.a.||$3||12.95% p.a.||$0|
|Newcastle Permanent Value+ Credit Card||11.99% p.a.||Greater of 2% or $2.50 per transaction||11.99% p.a.||$49|
|Qudos Bank Lifestyle||12.84% p.a.||Between $1 and $2 for ATM withdrawals, US$175 for emergency cash advances overseas. Other fees may also apply.||12.84% p.a.||$0|
|Qudos Bank Lifestyle Plus||16.35% p.a.||Between $1 and $2 for ATM withdrawals, US$175 for emergency cash advances overseas. Other fees may also apply.||16.35% p.a.||$0|
What else should I keep in mind?
If you’re thinking of getting a credit card and using it for cash advances, make sure you also consider the following factors:
- Cash advance fee. This fee is charged every time you make a cash advance transaction. It’s usually presented as the greater of a fixed dollar amount or percentage. For example, $3 or 3% of the transaction, whichever is greater.
- Purchase rate. Remember that the standard variable cash advance rate may not be the same as the purchase rate, so it's important to look at both.
- Annual fee. Credit card annual fees can range from $20 to $400 or more. When considering this cost, weigh up the features of the card and consider whether the benefits will offset the annual fee, so that you can choose a product that's affordable for you.
- ATM fees. Some credit cards charge a separate fee when you withdraw money from an ATM. Fees from ATM operators may also apply – especially if you're getting cash out with your credit card overseas.
- International transaction fee. Most credit cards charge a fee of 2-4% for transactions made in a foreign currency. If you plan on using a low cash advance rate credit card for transactions overseas or online (such as foreign ATM withdrawals or Internet gambling), make sure you also consider this fee and how it could affect the overall cost of a cash advance.
- Overseas fees for cash advances. Note that international transaction fees can also apply when you use your card to make purchases through international websites. Some credit cards also apply different cash advance fees for domestic and international transactions.
- Reward points. If you get a credit card that offers reward or frequent flyer points for your spending, keep in mind that cash advance transactions on credit cards aren’t usually eligible to earn points.
- Introductory offers. Some credit cards offer sign-up bonuses and introductory 0% interest rates for purchases or balance transfers. These offers can add short-term value to the card you choose, but it's important to note that the benefits usually don't apply to cash advance transactions. Always read the terms and conditions to make sure you'll be able to take advantage of this type of offer based on the way you plan to use your card.
Example: How much would it cost to withdraw cash using a credit card?
To give you an idea of the potential costs of using a credit card for a cash advance transaction, let's say you want to withdraw $1,000 cash from a credit card and plan to make repayments of $200 each month.
On a credit card with a 21.99% p.a. cash advance interest rate and a cash advance fee worth 3% of the transaction, you'd be charged a $30 cash advance fee. This gives you a balance of $1,030. It would then take around 6 months to repay the balance and cost $61.69 in interest. If you add the cash advance fee and interest charges up, this $1,000 cash advance would cost you $91.69.
What difference would a lower cash advance rate make?
In this scenario, if the credit card had a lower 13.99% p.a. cash advance rate (but all other details were the same), it would still take 6 monthly repayments to clear the balance but would cost $38.38 in interest. That's $23.31 less interest than the card with the higher cash advance rate.
Remember: In this scenario, you'd still have to pay the cash advance fee with either of the cards, and the costs would be different if you already had a balance or spent more with the card. You can use a credit card repayment calculator to estimate the costs for other cash advances or balances on your card.
Frequently asked questions
Have a question about low cash advance rate credit cards? Here you’ll find answers to the most common questions we get. You can also get in touch to find out more using the comment box below.
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