The 5 most common cash advance transactions
1. ATM withdrawals and cash out
One of the most common examples of a cash advance is when you use your credit card to withdraw money from an ATM or get cash out in a shop. Additional fees can also apply if you use your credit card at an ATM that's outside of your bank or provider's network.
2. Gift cards and prepaid cards
Most credit card providers classify gift card purchases as a "cash equivalent" transaction that is subject to the cash advance fee and interest rate. Adding funds to a prepaid card also falls under this classification.
3. Transfers between accounts
If you transfer funds from your credit card to an account, your card issuer will view it as a cash advance (even if it's a linked bank account). Some credit cards don't offer this type of transfer. But even if yours does, you can avoid cash advance fees by using a transaction or savings account for the transfer instead.
4. Buying foreign currency
Using your credit card to buy foreign currency or traveller's cheques also attract a cash advance fee and cash advance interest rate. If you're travelling, you could consider credit cards with overseas travel features instead.
5. Gambling transactions
Credit cards have restrictions on gambling transactions. But if you're able to use your card to buy lottery tickets, scratchies or for other gambling, it would typically be treated as a cash advance by most credit card providers. In some cases, you may even pay the cash advance rate when you use your credit card to pay for drinks and meals at a casino.
Hello,
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?
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.
Cheers,
Harold
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?
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.
Cheers,
May
Hi,
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.
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.
Cheers,
May
Hello
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
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.
Cheers,
Jonathan
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 :)
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.
Cheers,
Jonathan