Which credit cards have the lowest cash advance rates and fees?

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on March 11, 2021
Which credit cards have the lowest cash advance rates and fees?

Want to withdraw cash using your credit card? It can be expensive, so it’s handy to look at cards that have competitive cash advance rates and fees.

Whether you’re in the dusty streets of N’Djamena in Chad, or on Oxford Street in Sydney, you might find you need money, and fast. Relax, it’s not a scene out of the Bourne Identity - rather, a credit card cash advance could be a convenient way to get access to cold hard cash. This can be useful in situations where you need cash quickly or if you’re somewhere debit cards aren’t accepted.

But be aware - cash advances can be costly, and you definitely pay for the convenience.

Compare low cash advance rates and fees

Compare credit cards with competitive cash advance rates and fees below.

What is a credit card cash advance?

Credit cards are a pretty interesting product in that they are essentially a revolving loan, and a big feature of a credit card is the ability to get a cash advance. What this means is you can withdraw money using your credit card, which is technically money you don’t actually have.

A cash advance is essentially a short-term loan for withdrawing cash, and often with an interest rate to match. Credit card cash withdrawal charges (fees) are often around 3%, while the interest rates are usually well in excess of the already-high credit card interest rates, which are about 17-18% p.a according to CommSec. What’s more is that cash advances usually don’t have interest-free periods, so you pay that interest straight away.

Why use a credit card cash advance?

You might ask yourself, why not just get money out using your debit card i.e. money you actually own? Well, that’s a good question. If you think of a cash advance like a short-term loan, the picture starts to become a lot clearer.

A cash advance can be super handy in those rare scenarios where somewhere doesn’t accept a debit card, and you don’t have the cash in your bank account to use an ATM. A common scenario might be if you’re travelling, and you’re only using your credit card and need to pay a cash deposit for a hotel.

Now, you might associate such backwards financial technology with alleged third-world countries, but one of the most popular destinations that has surprisingly backwards payment tech is the United States. There, cash is still king (lots of people still get a physical paycheque!). There, a hotel in a smaller town or even a big city might only accept cash, as an example.

Another use for a cash advance is that it’s pretty much an instantaneous loan. Even the quickest payday lenders can often take upwards of an hour to approve your request for credit, and even charge a higher interest rate than a credit card. Lots of payday lenders have a maximum credit limit of $5,000. Quite frankly, you might need more than this if you’re paying for a hit on Jason Bourne, but who are we to judge?

Do cash advances affect or hurt your credit score?

Cash advances do not inherently affect your credit score, but you should consider why you’re withdrawing cash with your credit card. Failure to repay what’s essentially a short-term loan will likely impact your credit score, as well as your ability to get a loan in the future.

Pros and Cons of Credit Card Cash Advances

Before whipping out your credit card, there’s a few things you should know about cash advances.

Pros of a cash advance

  • Flexible and convenient: You can get what’s basically an instantaneous loan straight out of an ATM. However, if you’re doing this abroad, you might face international fees for the privilege of doing so.

  • Could be cheaper than other short-term loans: Despite the high interest rates, a cash advance could still be cheaper than other short-term loans. Always check the finer details.

Cons of a cash advance

  • No interest free days: Unlike regular card purchases, there’s not likely going to be interest-free periods with a cash advance, meaning interest accrues the moment you take money out. This is why it’s important to consider your need for a cash advance and whether you can pay it off as quickly as you can.

  • High interest rates: Cash advance interest rates often match the credit card’s purchase rate, which can exceed 20% p.a.

  • Fees add up: There’s often a fee for the privilege of making a cash advance, usually either as a percentage or dollar term, whichever is greater (e.g. 3% or $3).

  • Gambling could count as a cash advance: You might want to think twice about whacking your credit card on your sports betting account. Aside from gambling money you don’t actually own, it could count as a cash advance, which could sting when the bill comes in. Other things that could count as a cash advance are: gift cards, foreign currency purchases, and certain bills.

See also: Credit cards that block gambling

Savings.com.au’s two cents

Tread carefully when using a cash advance. With interest often accruing the moment you withdraw cash, it’s easy for a relatively low amount of money to spiral out of control.

Also consider your motivates for thinking about one in the first place. While they can be useful in a bind, a cash advance is a pretty expensive way to pay for frivolous purchases, even if they look cheaper than other types of loans. Nevertheless, cash advances can be handy in certain situations - just watch that interest rate, plus any fees, and know what you’re doing.

Photo by Timeo Buehrer on Unsplash

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Harrison is Savings.com.au's Assistant Editor. Prior to joining Savings in January 2020, he worked for some of Australia's largest comparison sites and media organisations. With a keen interest in the economy, housing policy, and personal finance, Harrison strives to deliver and edit news and guides that are engaging, thought-provoking, and simple to read.

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