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What credit card transactions are considered cash advances?
From getting cash out of an ATM to buying foreign currency or gift cards, discover all the transactions that are considered cash advances.
Most credit cards give you the ability to get cash or a “cash equivalent” using your account. This action is defined as a “cash advance,” and these transactions often attract a higher interest rate than purchases.
Generally speaking, you want to avoid cash advances whenever possible. Aside from a higher interest rate, they often require a sizable fee to perform and come with other restrictions, such as not being eligible for interest-free days or rewards points. Here are some common transactions that count as performing a cash advance.
What is a cash advance fee?
A cash advance fee is when your credit card issuer charges a fixed dollar value or a percentage of each cash advance. This normally applies to all ATM withdrawals, transfers, and cash equivalent transactions.
The 6 most common cash advance transactions
Credit card providers have individual terms of the transactions that they define as “cash advances,” and these cash advance definitions will be clearly outlined in the Terms and Conditions of your card.
Here, we’ve outlined the range of transactions that may be classified as cash advances and attract the cash advance rate and fees.
- 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.
- Overdraft protection. If you fund your overdraft with a credit card, know that it will be considered as a cash advance. This comes with the usual cash advance fees and a high APR.
- Gambling transactions. Purchasing lottery tickets, placing bets and paying for gambling at a casino or online are considered cash advances (or are outright illegal in states). 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 checks. Certain credit card issuers send checks 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 traveler’s checks. Using your credit card to buy foreign currency or traveler’s checks 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
- Cryptocurrency purchases. In February 2019, Coinbase, one of the largest cryptocurrency exchanges, alerted its customers that some credit card providers started treating cryptocurrency purchases as cash advances.
- Transferring between accounts. When you use your credit card account to transfer funds to another account, your card issuer may view it as a cash advance. Instances of this include repaying a loan taken from a friend and transferring money into your everyday banking account. If you do plan to use your credit card for electronic transfers, review the fees and charges at the onset.
How much does a cash advance generally cost?
You’ll typically pay the higher of a percentage of the amount you’re withdrawing or a flat fee. For example, the American Express Blue Cash Preferred Card has a cash advance fee of either $10 or 5% of the amount you’re withdrawing.
Assuming you take out a $400 cash advance, that means your fee comes out to $20.
Check out our cash advance calculator to determine just how much you can expect to pay on your cash advance.
Our pick for a cash advance credit card
OpenSky® Secured Visa® Credit CardRead more
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 card’s terms and conditions under “Interest fees and interest charges”.
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.
Credit card cash advance tip
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 traveling overseas? If you’re considering using your credit card for cash advances when traveling 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.
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