From getting cash out at an ATM to buying foreign currency or gift cards, discover all the transactions that can lead to cash advance fees and charges on your credit card.
Most credit cards give you the facility to get cash or a "cash equivalent" using your account. Known as "cash advances", these transactions often attract a higher interest rate than purchases. Cash advances also come with other restrictions, such as not being eligible for interest-free days or rewards points. Along with the higher interest rate and restrictions, these transactions can also attract additional cash advance fees.
What is considered a cash advance on a credit card?
Credit card providers have individual outlines of the transactions that they define as "cash advances". Here, we've outlined the range 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.
- 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 or traveller’s cheques. 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. Depending on the provider, 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 when
- 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 many such instances, outstanding balances from balance transfers start attracting the card’s cash advance rate at the end of the promotional period. As a result, if you don’t repay the balance completely before the introductory period ends, you could end up paying more than you initially expected.
- Transferring between accounts. When you use your credit card account to transfer funds to another account, your card issuer will view it as a cash advance. Instances of this include repaying a loan taken from a friend, transferring money into your everyday banking account, and in some cases, even transferring funds using phone banking. A good way to avoid paying interest on such transactions is to use your debit card instead. If you do plan to use your credit card for electronic transfers, it’s good that you review the fees and charges at the onset.
Credit Cards and Comparing Cash Advances
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. If you 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".
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. 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.
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.
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 conditions when travelling overseas? If you’re considering using your credit card for cash advances when travelling overseas, take into account that you could have to pay extra in the form of ATM fees and international transaction fees. There are some 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
Is there a limit to how much I can get as a cash advance?
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.
What is cash advance fee?
Your credit card issuer can charge a fixed dollar value or a percentage of each cash advance as cash advance fee. This normally applies on all ATM withdrawals, transfers, and making cash equivalent transactions.
I’ve used my new credit card to make purchases and for cash advances. Can I repay the balance from the cash advance first?
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.