When you use your credit card to withdraw cash, gamble or buy traveller's cheques, these are all considered cash advance transactions. Cash advances may be convenient, but they usually attract much higher interest rates than other credit card purchases. You can use this guide compare credit cards that charge lower cash advance rates than most cards.
You can also learn more about how cash advances work, how much they cost and the alternatives you can use.
We also explain how cash advance transactions work and list the potential costs and alternatives to credit card cash advances so that you can choose the right option for your situation.
What is a cash advance?
A cash advance is a type of credit card transaction that allows you to get cash or an equivalent to cash, such as foreign currency. This means you can basically spend the money however you want and that can lead to higher risks for lenders. So you usually have to pay a higher interest rate for cash advance transactions, as well as a cash advance fee In addition to getting cash out with your credit card, other transactions that may be considered cash advances include balance transfers, buying foreign currency, gift card or prepaid card purchases and top-ups, and gambling transactions. Read our guide on cash advance transactions for more details.
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 more competitive rates for cash advance transactions. A low cash advance interest rate generally ranges between 8.99% p.a. and 16% p.a.
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). Note that 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.
Compare credit cards with competitive cash advance rates
With cash advances typically being the most expensive transactions you can make with a credit card, it’s ideal to avoid them as much as possible. But if you think you’ll use this option and want to keep costs to a minimum, here’s a range of cards with competitive rates and fees.
Between $1 and $2 for ATM withdrawals, US $175 for emergency cash advances overseas. Other fees may also apply.
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.
Can I get a cash advance without a credit card?
If you need cash and don’t want to use your credit card, another option is to look at short-term loans, including online cash advances. This gives you a way to get a cash advance (or loan) even if you don’t have a credit card. Just remember to consider the rates, fees and repayments to decide if this option will suit your financial situation. Low cash advance rate credit cards can give you a way to get money quickly but the rates and fees may still lead to more debt in the long run. So remember to consider your options carefully and, if you need help, consider free support services that could help you manage your financial situation.
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.
Unlike regular credit card purchases, cash advances give you access to actual money or an equivalent. In this sense, they are similar to more traditional loans but don't require you to apply for more credit. Cash advances could suggest to a lender that a person is desperate for funds or needs cash to make a questionable purchase. As a result, most credit card providers view cash advances as "higher risk" transactions and apply higher interest rates and fees.
You can continue making minimum monthly payments until you clear the balance completely. But by doing so you would end up paying a lot in interest. Ideally, you should aim to pay the balance off in full as quickly as possible to keep costs to a minimum.
You can consider getting a secured or unsecured personal loan – both tend to charge lower interest rates when compared to credit cards. How quickly you get access to funds depends on the lender.
Amy is an editor and writer at finder.com.au with more than 10 years experience covering credit cards, personal finance and various lifestyle topics. When she’s not sharing her knowledge on money matters, Amy spends her time as an actress.
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