Most credit cards give you the ability to get cash or a "cash equivalent" using your account. Known as "cash advances", these transactions often attract a higher interest rate than purchases, as well as additional cash advance fees. Cash advances come with other restrictions as well, such as not being eligible for interest-free days or rewards points.
Here, you'll find out more about credit card cash advance transactions, including examples of payments that may be defined as "cash advances", how to check the rates and fees that apply and what to think about before using your card for a cash advance.
What is considered a cash advance on a credit card?
Credit card providers have individual terms of the transactions that they define as "cash advances". These are some examples of transactions that may be classified as cash advances and attract the cash advance rate and fees.
The 5 most common cash advance transactions
ATM withdrawals and cash out. Using your credit card to withdraw money from an ATM or at the checkout is a cash advance. Additional fees could also apply if you use your credit card at a non-network ATM.
Gambling transactions. Purchasing lottery tickets and scratchies, placing bets and paying for gambling at a casino or online are considered cash advances. Don’t be surprised if you also have to pay the cash advance rate even on money you spend eating and drinking while at a casino. See our guide on which credit cards you can or can't gamble with.
Gift cards and prepaid cards. Most issuers consider the purchasing or loading value onto a gift card or other prepaid card as a “cash equivalent” transaction that is subject to the cash advance fee and interest rate.
Credit card cheques. Certain credit card issuers send cheques to cardholders that they can use to withdraw money from their accounts as and when they like. While using such cheques can be tempting, you may want to reconsider to avoid the cash advance rate.
Buying foreign currency. Using your credit card to buy foreign currency or traveller’s cheques is not a good idea, because such transactions attract your card’s cash advance rate. Instead, if you're going overseas, you should look into a card specifically designed for travel.
Other transactions that may be defined as cash advances on your credit card
Bill payments. Many credit card providers classify some or all bill payments as cash advance transactions. This could include government charges such as ATO payments, utility payments and some BPAY payments. Check with your issuer and the business you're paying to find out if your transaction will be considered a cash advance.
Balance transfers. A number of Australian credit cards come with balance transfer offers, giving cardholders the ability to save money in the form of interest. In most cases, outstanding debt from balance transfers start attracting the card’s cash advance rate at the end of the promotional period.
Transfers between accounts. When you use your credit card account to transfer funds to another account, whether your own or someone else's, your card issuer will view it as a cash advance. A good way to avoid paying interest on such transactions is to use your debit card instead.
If you often use your credit card for cash advance transactions, you may want to look at credit cards that charge the same interest rate for purchases and cash advances. While you'll still have to pay the cash advance fee, these types of cards make it easier to keep track of the interest charges and sometimes offer lower rates than other credit cards.
Where can I find the cash advance fees and charges for my credit card?
Most credit card issuers will charge both a cash advance fee and cash advance interest rate for applicable transactions. Details of the cash advance interest rate are also included in the "Key Facts Summary" that credit card issuers have to provide when you're looking at a new card.
If you already have a credit card and want to know what you'll be charged, you can usually find these details in the product disclosure statement or terms and conditions under "fees and charges". But if you’re unsure or can't find this information, contact your credit card issuer to confirm what rates and fees apply before choosing a credit card or using one for cash advances.
Compare Credit Cards With Low Cash Advance Rates
Updated February 19th, 2020
What else should I consider before getting a cash advance?
If you plan on using your credit card for cash advances, consider the following questions to help keep costs to a minimum:
Will you earn reward points? Typically, you won’t earn reward points for cash advances, unless a credit card comes with some kind of a promotional offer.
What are the cash advance conditions when travelling overseas? If you want to use your credit card for cash advances overseas, keep in mind ATM fees and international transaction fees could make it even more expensive. But if you still want this option, you can compare cards that offer lower foreign transaction and currency conversion fees.
What other options are there? If you want to use your credit card, see if there's a way to make a purchase instead of a cash advance. For example, if you can pay with your card instead of cash, you won't need to withdraw money from your account. You could also use your debit card, consider getting a personal loan, or ask your bank if it can provide a line of credit or an overdraft facility.
Credit cards generally aren’t designed to be used as an ATM card. So if you think that you’ll regularly perform cash advances, you may want to consider another option to avoid accruing high fees. Regardless, make sure to read the terms and conditions before applying to ensure that you’re not confronted with any nasty surprises when you get your hands on the card.
Frequently asked questions
Expect your credit card to come with minimum and maximum cash advance limits. The minimum could be around $20, and the maximum would depend on your card’s credit limit and your card issuer’s discretion.
Your credit card issuer can charge a fixed dollar value or a percentage of each cash advance as cash advance fee. This normally applies to all ATM withdrawals, transfers, and cash equivalent transactions.
As a general rule, your credit card issuer has to allocate your payments to amounts that attract the highest interest first. Since cash advances attract higher interest than purchases, you can expect your payments to automatically go towards the cash advance balance first.
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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