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What you need to know about cash advance interest rates

A credit card cash advance gives you quick access to money, but it often comes at a high price.

While credit cards are designed to pay for purchases, you can also use them to get cash – known as a cash advance. Cash advance rates are generally higher and come with extra fees when compared to regular purchases. So, it’s important to consider whether the convenience of using a credit card for cash advances is worth the price.

Compare low interest rate cash advance credit cards

Name Product Welcome Offer Rewards Purchase Interest Rate Cash Advance Rate Annual Fee Min. Credit Score Description
HSBC +Rewards™ Mastercard®
30,000 Points
2x points per $1 spent
11.9%
11.9%
$0 annual fee for the first year ($25 thereafter)
Min. recommended credit score: 630
Get 30,000 Points (up to $150 in value) when you spend $2,000 in the first 6 months. Plus, get the 1st year annual fee waived for the primary cardholder ($25 value). Apply by January 31, 2022.
Scotiabank Value Visa Card
0.99% rate on balance transfers for 6 months
N/A
12.99%
12.99%
$29
Min. recommended credit score: 660
Get a 0.99% introductory interest rate on balance transfers with a 0% transfer fee for the first 6 months. Apply by February 28, 2022.
National Bank Syncro Mastercard
N/A
N/A
8.90% or prime + 4.00%
12.9%
$35
Min. recommended credit score: 740
Enjoy low purchase interest, cash advance and balance transfer rates.
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What is a cash advance?

A cash advance is a type of transaction that allows you to access funds in the form of cash or a “cash equivalent”. For example, using your credit card to withdraw money from an ATM, pay for gift cards or buy foreign currency are all commonly defined as cash advance transactions.

Here are some important facts about cash advances:

  • Higher interest rates. Typically have higher interest rates than standard credit card purchases, with most ranging from 19.99% APR. to 22.99% APR.
  • Fee. They also usually attract a fee worth 1-3% of the transaction (it could also be a dollar amount).
  • No rewards. Not eligible for features such as interest-free days or reward points.

How to calculate cash advance charges

First, divide the cash advance interest rate by 365 (number of days in a year). Then, multiply it by the amount withdrawn. Finally, multiply that number by the number of days from the transaction to the date it is paid (since cash advances start to accrue interest immediately). If your card charges a cash advance fee, you should add this to your final number to get the total cost of your cash advance.

As an example, let’s say you take $500 out of an ATM, with a cash advance rate of 21.99% and you pay the full amount back in 18 days. In addition, you’re charged a $4 cash advance fee.

  1. 21.99% / 365 days = 0.06024
  2. 0.06024 x $500 = 30.12
  3. 30.12 x 18 days = $542.22
  4. $542.22 /100% = $5.42
  5. $5.42 + $4 = $9.42

You will pay $9.42 to borrow $500 for 18 days.

Credit card cash advance rates and fees

Using your credit card for a cash advance should be a last resort, and if you do end up taking this path, keep the following in mind:

  • Cash advance fee. These are usually charged as a percentage of the total cash advance amount. For example, if you withdraw $1,000 on a credit card with a cash advance fee of 3%, you would pay a fee of $30. This fee will be added to the balance on your card and increase your interest charges.
  • Cash advance rate. Interest applies from the day you make the cash advance transaction. For example, if your credit card has a cash advance rate of 21.99% APR and you made a cash advance transaction worth $1,030 (with a 3% cash advance fee), you would be charged $18.64 for the first month you carried this debt. If you only paid the minimum off it each month, it would take you around 9 years to pay it off and cost a total of $1,274 in interest.
  • ATM fees. Some providers and third-party companies will charge an additional fee when you withdraw money from an ATM outside your provider’s network. These charges will add to the overall cost of your cash advance. You may be able to avoid these fees by using an ATM that’s part of your provider’s network.
  • Overseas fees. If you use a credit card for a cash advance overseas, you could attract other charges, including ATM fees and foreign currency conversion fees. These will be added to the total cost of the cash advance, leading to even higher interest charges.

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What type of transactions are considered cash advances?

Depending on your credit card, a cash advance could include any or all of the following types of transactions:

  • ATM withdrawals. Getting cash from an ATM using your credit card.
  • Gambling transactions. Whether it’s online or at the casino, gambling purchases can be considered as cash advances. Occasionally, purchasing food and drinks at the casino will also be charged as a cash advance.
  • Foreign currency and traveller’s cheques. Since they’re a form of cash, purchasing them with your credit card is considered a cash advance.
  • Buying prepaid cards and some gift cards. Buying a prepaid card is usually classified as a cash advance. If you buy a gift card from some merchants, like a financial institution, could also be considered a cash advance. That may also apply to reloading prepaid cards, debit or store cards using your credit card.
  • Online transfers. If “credit” from your card is being converted into cash that is going into your bank account, it’s a cash advance.
  • Utilities. Using your credit card to pay utility bills could be considered as a cash advance.
  • Government charges. If you pay a government fee with a credit card, it could be processed as a cash advance.

Each credit card provider defines cash advances in they’re own way. So it’s best to read your credit card’s Product Disclosure Statement for a full list of what your credit card provider considers a cash advance and the charges that you’ll incur.

What to consider before using your credit card for a cash advance

Unless it’s absolutely necessary to use your credit card for a cash advance, it’s best to avoid it. Here are the drawbacks and benefits of getting a cash advance:

Cons

  • Higher cash advance rate. Cash advance interest rates are always higher than purchase interest rates.
  • Cash advance fees. The cash advance fee is usually 1% of the total transaction cost, or $3.50 to a maximum of $10.
  • No interest-free days. There’s no grace period with a cash advance –your transaction will accrue interest from the day it’s made.
  • No points. Cash advance transactions are ineligible to earn rewards or travel rewards points.
  • ATM fees. If withdrawing from an ATM outside of your banks network, an ATM fee will be charged.
  • Foreign currency transaction fees. You could be charged for currency conversion if you use your credit card to get cash out at an overseas ATM, adding to the overall cost of the cash advance.

Pros

  • Credit card payment allocation. Credit card repayments are made to the debt that has the highest rate of interest first, which is usually a cash advance transaction.
  • Having cash in hand. If you don’t have access to cash any other way, this could be a viable solution.

What portion of my repayment goes towards the cash advance?

Banks have to allocate your repayments to the debt that is accruing the highest interest rate first. This means if you’ve used your credit card for both purchases (which might accrue interest at 19.99% APR for example) and cash advances (which might collect 22.99% APR), your repayments will go to paying off your cash advance balance first. If you’re trying to repay your purchases without collecting interest, it’s important to keep in mind how your repayments are being allocated.

Why do banks charge higher interest rates for cash advances?

Cash advances are similar to short-term loans in that they provide you with funds on short notice. The cash you get can then be used for anything you want, including transactions you wouldn’t normally be able to use a credit card for (such as paying other debts) or providing you with immediate cash if you don’t have any on hand from your debit account. As such, these transactions are considered as being a greater risk than standard credit card purchases.

A higher standard interest rate can help lenders offset this risk by providing them with more potential profits when you use your card for a cash advance. The rates and fees applied can also help deter you from regularly using a credit card for cash advance transactions, which also reduces the potential risk for lenders.

What are the alternatives to cash advances?

If you want to avoid the extra fees and high interest rates that come with using your credit card for a cash advance, you can consider the following alternatives:

  • Debit cards. Using your debit card to withdraw money from your bank account won’t attract cash advance fees. In fact, it’s likely to be fee-free if you use your own bank’s ATM network. You’ll need to have the money in your bank account to do this.
  • Direct bank transfers. If you need to make a payment straight away, you could consider doing a direct wire transfer from your bank account. This allows you to pay anyone using your own money instead of funds from your credit card, which means you won’t be charged interest or a cash advance fee. Again, you’ll need to have the money in your bank account.
  • Payday loans. Consider a payday loan, also known as a short-term cash loan. While most lenders have a fast turnaround time, you’ll be subject to high interest rates.
  • Personal loan. A personal loan is usually more affordable than a credit card cash advance or payday loan. Getting approved can take no longer than a few minutes, but it usually takes a few days to receive the funds. If you can wait and are approved for a personal loan, funds will be deposited directly into your bank account and you’ll skip the cash advance fees.
Name Product Welcome Offer Rewards Purchase Interest Rate Cash Advance Rate Annual Fee Min. Credit Score Description
HSBC +Rewards™ Mastercard®
30,000 Points
2x points per $1 spent
11.9%
11.9%
$0 annual fee for the first year ($25 thereafter)
Min. recommended credit score: 630
Get 30,000 Points (up to $150 in value) when you spend $2,000 in the first 6 months. Plus, get the 1st year annual fee waived for the primary cardholder ($25 value). Apply by January 31, 2022.
Tangerine World Mastercard
15% cash back
Up to 2% cash back
19.95%
19.95%
$0
Min. recommended credit score: 600
Earn an extra 15% cash back (up to $150) on up to $1,000 of everyday purchases in the first 2 months Until January 31, 2022. Plus, get a 1.95% interest rate on balance transfers for the first 6 months (valid within the first 30 days of account opening, 1% transfer fee applies).
BMO CashBack Mastercard
5% cash back
Up to 3% cash back
19.99%
22.99%
$0
Min. recommended credit score: 660
Get 5% cash back on all eligible purchases in the first three months of card membership (up to max. spend of $2,500). Plus, get a rate of 1.99% on balance transfers with a 1% balance transfer fee for nine months.
BMO Preferred Rate Mastercard
3.99% rate on balance transfers for 9 months
N/A
12.99%
15.99%
$20
Min. recommended credit score: 660
Get a rate of 3.99% on balance transfers for 9 months with a 1% transfer fee. Plus, get the $20 annual fee waived in the first year.
Tangerine Money-Back Credit Card
15% cash back
Up to 2% cash back
19.95%
19.95%
$0
Min. recommended credit score: 600
Earn an extra 15% cash back (up to $150) on up to $1,000 of everyday purchases in the first 2 months Until January 31, 2022. Plus, get a 1.95% interest rate on balance transfers for the first 6 months (valid within the first 30 days of account opening, 1% transfer fee applies).
Scotiabank Value Visa Card
0.99% rate on balance transfers for 6 months
N/A
12.99%
12.99%
$29
Min. recommended credit score: 660
Get a 0.99% introductory interest rate on balance transfers with a 0% transfer fee for the first 6 months. Apply by February 28, 2022.
Simplii Financial Cash Back Visa Card
10% cash back
Up to 4% cash back
9.99% intro APR for the first 6 months, 19.99% thereafter
22.99%
$0
Min. recommended credit score: 650
Get 10% bonus cash back at eligible restaurants and bars for the first 4 months (up to $500 spend). Plus, get a 9.99% introductory annual interest rate on purchases for the first 6 months.
Brim Mastercard
Up to $200 worth of bonuses
1 point per $1 spent
19.99%
24.99%
$0
Min. recommended credit score: 700
Earn up to $200 worth of bonus points when you shop with Brim retailers for the first time through the Brim mobile app.
Walmart Rewards Mastercard
Up to $25 in Reward Dollars
Up to 1.25% cash back
19.89%
22.97%
$0
Min. recommended credit score: 650
Get up to $25 in bonus Walmart Reward Dollars.
American Express Cobalt Card
50,000 points
Up to 5x points per $1 spent
20.99%
21.99%
$155.88
Min. recommended credit score: 700
Earn up to 50,000 Membership Rewards points in your first year. Earn 2,500 Membership Rewards points for each monthly billing period in which you spend $500 in net purchases on your card (up to 30,000 points). Plus, earn a Welcome Bonus of 20,000 Membership Rewards points when you spend a total of $3,000 in purchases on your Card in your first 3 months of Cardmembership.
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Bottom line

Cash advances can be convenient when you need money in a hurry and have no other option, but the rates and fees they attract mean that cash advances should only be considered as a last resort. If you still think you may use your credit card for a cash advance, you may want to compare credit cards with a low cash advance rate to see if there is an option that will work for you and save you money.

Frequently asked questions about credit card cash advances

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