Cash advances – the interest rate and fee you’ll pay

A credit card cash advance gives you quick access to money, but on most cards it won't come cheap. Here's what you need to know.

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If you need money in a hurry, one of the easiest options is to use your credit card to withdraw cash from an ATM. This option comes at a cost: you'll pay a one-off cash advance fee for each transaction, plus pretty hefty interest charges straight away. In this guide, we take you through how interest works on cash advances, the cost of fees and best practices for managing this kind of transaction.

What is a cash advance?

A cash advance is a type of transaction that allows you to access funds in the form of cash or a "cash equivalent". Three common examples are:

  • Withdrawing money from an ATM
  • Buying gift cards or travel money
  • Gambling

If you get a credit card with a promotional balance transfer offer, there's also a good chance that outstanding transferred balances at the end of the introductory period will start attracting the card's cash advance rate. The specific transactions that attract the cash advance rate can vary depending on your credit card, so you should contact your provider or check the product disclosure document for full details. Finder guide has more details about what transactions may be considered as cash advances.

How much do cash advances cost?

Cash advances typically have higher interest rates than standard credit card purchases, with most ranging from 19% p.a. to 22% p.a. They also attract a cash advance fee worth 2-3% of the transaction and are not eligible for features such as interest-free days or reward points.

Sometimes, you will also pay an ATM withdrawal fee, which could be charged by your provider, the ATM operator, or both. There are some credit cards that charge the same interest rate for purchases and cash advances, although the cash advance fee and any ATM fees will still apply.

How to calculate cash advance charges

First, divide the cash advance interest rate by 365 (number of days in a year). Then, multiply it by the amount withdrawn. Finally, multiply that number by the number of days from the transaction to the date it is paid (since cash advances start to accrue interest immediately). If your card charges a cash advance fee, you should add this to your final number to get the total cost of your cash advance.

As an example, say you withdrew $500 from an ATM with a card that has a cash advance rate of 21.99% p.a. Let's also say you are charged a 3% cash advance fee of $15. In this scenario, you're not charged an ATM fee.

  1. 21.99 percent / 365 days = 0.06024
  2. 0.06024 x $500 = $30.12
  3. $30.12 x 18 days = $542.22
  4. $542.22 /100 percent = $5.42
  5. $5.42 + $15 = $20.42

This means it would cost you $20.42 to borrow $500 for 18 days.

Why do banks charge higher interest rates for cash advances?

Cash advances are similar to short-term loans in that they provide you with funds on short notice. The cash you get can then be used for anything you want, including transactions you wouldn't normally be able to use a credit card for (such as paying other debts). As such, these transactions are considered as being a greater risk than standard credit card purchases.

A higher standard interest rate can help lenders offset this risk by providing them with more potential profits when you use your card for a cash advance. The rates and fees applied can also help deter you from regularly using a credit card for cash advance transactions, which also reduces the potential risk for lenders.

What to think about before making a cash advance

Cash advances aren't the same as purchases. As well as the fees and interest costs, here are some other key details to keep in mind:

  • Cash advance limits. Most credit cards have daily, weekly or monthly cash advance limits in place. For example, you may only be able to withdraw up to $500 a day. Or, you may only be able to access a percentage of your available credit limit for cash advances.
  • Repayments. Your credit card provider has to apply your repayments toward the part of your balance that attracts the highest interest first. Since cash advances tend to have higher interest rates than purchases, your repayments will usually go towards reducing your cash advance balance first.
  • No interest-free days. Most credit cards give cardholders the ability to make use of interest-free days if they pay their closing balances in full each month. These interest-free days only apply to purchases. When you use your card for a cash advance, it starts attracting interest straight away.
  • Rewards. Cash advance transactions are not considered "eligible" when it comes to earning rewards points or meeting a bonus point spend requirement.
  • Introductory 0% p.a. interest rate offers. Most 0% interest offers apply to standard purchases or balance transfers, so cash advance transactions are generally not eligible for the promotional rate of interest.

What are the alternatives to cash advances?

If you want to avoid the extra fees and high-interest rates that come with using your credit card for a cash advance, you can consider the following alternatives:

  • Debit cards. Using your debit card to withdraw money from your bank account won't attract cash advance fees. In fact, it's likely to be fee-free if you stick to your own bank's ATM network.
  • Direct bank transfers. If you need to make a payment straight away, you could consider a direct transfer from your bank account. This allows you to pay anyone using your own money instead of funds from your credit card, which means you won't be charged interest or a cash advance fee.
  • Loans. If you need extra funds, you may also want to consider getting a payday loan or a personal loan to cover the costs. These options could have lower interest rates than credit card cash advances. Plus, some short-term loan issuers can give you access to approved funds on the same day or by the next business day.

While credit card cash advances can give you quick access to cash, the costs involved usually outweigh the benefits. Make sure you understand what is considered a cash advance and the interest rates and fees that apply to weigh up whether it's worth it. And if you still think you may use your credit card for a cash advance, you may want to compare credit cards with low cash advance rates to see if there is an option that will work for you.

Low cash advance credit cards comparison

Name Product Interest-free period Cash advance rate Purchase rate Annual fee
Bendigo Bank Low Rate Credit Card
Up to 55 days on purchases
13.99% p.a.
0% p.a. for 12 months, reverts to 11.99% p.a.
Save with 0% p.a. interest on purchases and balance transfers for up to 12 months, with a one-time 2% balance transfer fee.

Compare up to 4 providers

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Frequently asked questions about cash advances

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26 Responses

    Default Gravatar
    BRETTMay 25, 2017

    I was looking at a cash advance and realise the interest is higher but my question is say I owe $1000 on my credit card and get $100 cash advance do I pay the higher interest rate on the $100 until it’s paid in full or do I now pay the higher interest rate on the $1100 until it’s paid in full?

      Avatarfinder Customer Care
      HaroldMay 25, 2017Staff

      Hi Brett,

      Thank you for your inquiry.

      Typically, regardless of the amount, the interest for cash advances is normally 20% p.a. or more, which is considerably higher than the purchase rate of around 13% p.a. that some low rate credit cards charge. With this in mind, credit cards typically charge higher interest rates. So, in your example, your cash advance will immediately be charged with the cash advance interest rate and unless you don’t pay in full your cash advance, you will continually incur interest, which can be very expensive.

      With this in mind, you might want to try and apply for a personal loan, instead, which might offer a lower interest rate.

      I hope this information has helped.


    Default Gravatar
    BradleyOctober 15, 2016

    Took a cash advance of $200, charged $5; Paid amount due for the month on time and next statement have additional interest charge of $1. Why when I paid it off and how long will this continue?

      Avatarfinder Customer Care
      MayNovember 4, 2016Staff

      Hi Bradley,

      Thank you for your question.

      Your card will continue to charge interest each time you’re not able to pay your balance in full at the end of the payment cycle. So in the next statement you receive, you’ll be able to see your remaining balance in the previous statement plus interest.

      However, if you have paid your account balance in full like you did for your cash advance, in your next statement, you will not be able to see any unpaid fees and interest. Unless if there are any due interest or fees that have not been accounted for in the previous statement/cut-off, these charges will most likely appear on your next statement.


    Default Gravatar
    HarryMay 1, 2016


    I was wondering with my credit card which has interest free period of 55 days on purchases whether a cash advance would affect my interest free rate on purchases?

    For example, if I take a cash advance of $500 on 1st of June, if I then used my card for purchases on 4th June would I still have the interest free rate on purchases?

    Thanks in advance.

      Avatarfinder Customer Care
      MayMay 3, 2016Staff

      Hi Harry,

      Thanks for your question.

      Interest-free days provide you with a period of purchasing with no interest charges. The requirement for receiving this benefit is to repay your balance in full by the payment due date. An example of that is the 55 interest-free days on purchases, excluding cash advances. So your cash advances will not affect your 55 interest-free days.

      However, please keep in mind that if you use your card on any form of cash advance, your card will immediately charge you with interest and cash advance fees – which of course, you need to pay off as well on your due date.

      I hope this has answered your question.


    Default Gravatar
    MarkDecember 2, 2015


    I would like to take a cash advance on my credit card which charges 21.49% PA for CA. I intend to have this paid back in 20 days.

    Is the calculation I am using correct?

    21.49 / 360 X 20 = 1.20%

    Total amount to repay being $1518 excluding other fees?

    Thank you

      Avatarfinder Customer Care
      JonathanDecember 2, 2015Staff

      Hi Mark, thanks for your inquiry!

      Nice work trying to work your interest repayment out, there are only a couple of figures that need replacing in your equation.

      0.2149 / 365 x 20 = 0.01177534246
      = 1.18% (2 decimal places)
      You can multiply that percentage by your amount outstanding and number of days for the total amount of interest.



    Default Gravatar
    MaddyJuly 1, 2015

    Hi there,
    I am new to the credit card game. I am going overseas in the next few weeks and intend to use my credit card for purchases and for cash. I have a 21.49% cash advance rate – does this mean with every cash withdrawal I make I am charged 21.49% on top of what I withdrawal? For example I take out $200 will I then owe $42.98(21.49/100 x 200) on top of the $200 amount?

    I have a debit card – should I transfer money from my credit account into my debit to make withdrawals or does this still come with a fee?

    Thank you in advance :)

      Avatarfinder Customer Care
      JonathanJuly 8, 2015Staff

      Hi Maddy,

      Thanks for your inquiry.

      The cash advance rate of 21.49% p.a. is calculated on a daily basis, multiplied by the cash advance amount outstanding by the number of days that the debt is remaining.

      Please refer to the following guide for more information on cash advance interest rates.

      Withdrawal fees for credit cards depend on the bank. Generally, cash withdrawals from the bank’s ATM or partner ATM will not incur any fees. You may also like to refer to low-interest rate credit cards which can provide the flexibility and convenience to spend and make purchases on your card whilst taking advantage of lowest interest repayments. Please ensure to read through the relevant product disclosure statement and terms and conditions to ensure that you got everything covered before you apply.


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