Getting a cash advance on a business credit card

It's usually only recommended as a last resort, but if you do want to get a cash advance on a business credit card, there are right and wrong ways of going about it.

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Using your company credit card to withdraw cash is known as a “cash advance”, and it’s generally a bad idea. That’s because card issuers usually charge a cash advance fee of around 3%; they’ll also sometimes charge a higher rate of interest on this part of your balance and your usual interest-free grace period on purchases won’t apply.

As well as getting cash from an ATM, the term “cash advance” will usually apply to any credit-for-cash transactions – which could include getting cashback from a merchant, buying foreign currency or even buying casino chips.

Nevertheless, it may sometimes be useful to be able to use your business credit card as an alternative if you need to get hold of cash, perhaps to pay a supplier, and some cards offer better facilities to do this than others.

Capital on Tap Business Credit Card with Capital Club membership

Capital on Tap – Business funding for the real world

  • Get up to £50,000 in minutes to grow your business.
  • Spend on your Business Mastercard or send funds to your high street bank account.
  • Earn cashback or Avios on your business spending.
  • No hidden fees.

Representative example: When you spend £1,200 at a purchase rate of 39.9% (variable) p.a., your representative rate is 39.9% APR (variable).

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How to complete a business credit card cash advance sensibly

The first step is to evaluate if there are any alternative ways of getting your hands on the cash needed. If you withdraw cash from a current account (without going overdrawn), you’ll be charged no interest. If there are no funds in your current account, a business credit card money transfer may work out cheaper (more on these below).

If there are no alternatives, you should select the cheapest form of cash advance for your card (although you’ll usually be charged the same for ATM withdrawals and cashback transactions).

Once the transaction has been made, your first interest payment – and a one-off fee if applicable – will be charged. You’ll be charged interest again every day, until the amount withdrawn is paid back onto your account. In an ideal world, you’d therefore aim to pay the money back on the same day you made the cash advance.

How do business credit card money transfers work?

In this context, a “money transfer” is the transfer of funds from your credit card to your current account.

Not all credit cards allow this, and often, if it is allowed, the interest rate will be higher than for a “balance transfer” (a transfer of funds between two credit cards), and once again, a one-off fee will usually be involved.

It’s often possible to arrange a money transfer from your credit card using your Internet banking or your bank’s mobile app. Failing that, you can get in touch with your credit card provider. The process will complete as quickly as a traditional bank transfer.

The good news is there are some business credit cards out there that let you transfer funds to other accounts without charging you the one-off fee. These cards operate more like a flexible, ongoing line-of-credit business loan, but just happen to come with a card too. If you can get your hands on one of these, it may be a good bet. If you’re in a hurry, since you don’t actually need to use the card to action a money transfer, you may not even need to wait for it to be delivered.

Dos and don’ts

Do

  • Consider a credit card with low or even no money transfer charges
  • Pay off your balance that day, or as soon as possible
  • Take a closer look at the rates and fees of any card you’re considering using
  • Consider alternative forms of getting cash

Don’t

  • Opt for an expensive cash advance unless it’s an emergency
  • Withdraw more than you can afford to pay back

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