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Need to withdraw cash from your credit card? Compare credit cards with the lowest cash advance rates and cash advance fees.
In practice the vast majority of Australian credit cards are cash advance cards, with the exception of cards directly issued by American Express which does not routinely offer cash advances.
High interest rates apply immediately to cash advances
Taking regular cash advances from your credit car is not a good idea, for two reasons:
Upfront cash advance fee
There’s also a further charge usually applied to a cash advance in the form of an upfront fee. This could be a fixed amount, such as $3, or a percentage of the amount advanced, e.g. 2%. Fees for overseas cash advance withdrawals are sometimes higher.
Why do cash advances cost so much?
A cash advance is costly partly because it is effectively an instant, unsecured loan. You don’t have to fill in an application form, the card issuer has no control over how the money will be spent, and there is no guaranteed asset that can be called upon in the event of a repayment default. Contrast this with lower-interest sources of funds like a personal loan (usually granted for a specific purpose) or secured loan (home loan, car loan, construction loan).
‘Cash advance’ has a wide definition
In addition to an over-the-counter or ATM delivery of Australian banknotes, your card issuer may also consider the following credit card transactions to be cash advances:
No rewards points earned on cash advances
If you take a cash advance from a credit card that allows you to earn rewards points on purchases, you won’t earn any points on your cash advance transaction because a cash advance is not an eligible purchase for the purpose of earning rewards.
Look for alternatives to a credit card cash advance
If you are going to need access to additional cash regularly or for long periods, talk to your bank about a personal loan or overdraft, where the interest rates are much lower. But if this isn’t possible, look for a credit card with a lower than average interest rate for cash advances.
Cards with low cash advance interest rates
You’re unlikely to find a low cash advance interest rate on a card issued by one of the Big Four banks. But many smaller banks and credit unions do have cards with low cash advance interest rates. The ME frank Credit Card, for example, usually has the same low interest rate, currently 11.99% p.a., for both purchases and cash advances.
A slightly lower than average cash advance rate may be a better option
Given that a cash advance is, at best, a short-term convenience rather than a long-term solution to any financial problems you may have, consider looking for a card with a slightly lower cash advance interest rate – perhaps in the range 17%-20% p.a. – to make occasional cash advances slightly less painful. This will allow you to shop around for a card which may also have other benefits besides the low interest rate.
Consider the card’s other features before you decide
Choosing a card solely on the basis of its low cash advance interest rate may not be a good idea. Credit cards come with many other features, such as rewards points and complimentary benefits, that may far outweigh the advantage of the low interest rate. You will also need to take other costs, such as the annual fee, into consideration.
Check out the cash advance interest rates on the cards shown below, but don’t ignore the card’s other features.
Promotion. Credit criteria, fees and charges apply. Read the terms and conditions before making a decision.
A credit card cash advance typically refers to the withdrawal of a sum from your credit card account, delivered in Australian banknotes either over-the-counter or from an ATM.
But your card issuer may also define the following credit card transaction types as cash advances:
Most credit cards, especially those issued by the Big Four banks, charge a very high interest rate for cash advances. Typically this rate will be even higher than the rate charged for unpaid purchase balances, and it will often fall in the range 21%-22%p.a.
Yes, some credit cards do have a much lower interest rate for cash advances. However, 'lower’ is a relative term here, because a rate of between 10% and 13% p.a., charged by some smaller banks and credit unions, is low for a credit card but relatively high when compared with personal loan, secured loan and overdraft interest rates.
Also note that a card which advertises a low interest rate for purchases may still have a rate of over 20% p.a. for cash advances, or may not even offer cash advances.
No. The 44 or 55 interest-free days available on purchase transactions do not apply to cash advances. Interest on cash advances will be charged from the date of the transaction until the date of full repayment.
Most credit cards charge a cash advance fee as well as interest. This may be a fixed amount (e.g. $3 per transaction) or a percentage (e.g. 2% of the amount withdrawn) or the greater of the fixed amount and the percentage (e.g. $3, or 2% of the withdrawal amount, whichever is greater).
Also bear in mind that many credit cards charge an annual fee, which needs to be counted as part of the cost if you are just going to keep the card in your wallet for the purpose of cash advances.
A cash advance is an instant, unsecured loan – no paperwork, no delay, no questions asked. The card issuer is taking a bigger risk with a cash advance than other institutions do when making personal loans, home loans and other loans secured on a fixed asset.
No. Rewards points are earned on eligible purchases, not on cash advances and cash equivalents. A cash advance is not an eligible purchase for the purpose of rewards points.
When assessing the value to you of any credit card, don’t just look at one feature. Take into account other attributes, such as rewards points, cashback, complimentary insurance, free flights and airport lounge access.
Also consider any negative features, such as the annual fee.