What credit card transactions are considered cash advances?
What credit card transactions are considered cash advances

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. Known as “cash advances,” these transactions often attract a higher interest rate than purchases. Cash advances also come with other restrictions, such as not being eligible for interest-free days or rewards points. Along with the higher interest rate and restrictions, these transactions can also attract additional cash advance fees.

What is a cash advance on a credit card?

A credit card cash advance is a transaction that gives you quick access to cash via an ATM or bank and typically comes with a high interest rate that will begin to accumulate immediately. Credit card providers have individual terms of the transactions that they define as “cash advances,” and these 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.

The 5 most common cash advance transactions

  • 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.
  • 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

  • Bill payments. Many credit card providers classify some or all bill payments as cash advance transactions. Depending on the provider, this could include government charges such as ATO payments, utility payments and some BPAY payments. Check with your issuer and the business you’re paying to find out when
  • Balance transfers. A number of American credit cards come with balance transfer offers, giving cardholders the ability to save money in the form of interest. In many such instances, outstanding balances from balance transfers start attracting the card’s cash advance rate at the end of the promotional period. As a result, if you don’t repay the balance completely before the introductory period ends, you could end up paying more than you initially expected.
  • Transferring between accounts. When you use your credit card account to transfer funds to another account, your card issuer will view it as a cash advance. Instances of this include repaying a loan taken from a friend, transferring money into your everyday banking account, and in some cases, even transferring funds using phone banking. A good way to avoid paying interest on such transactions is to use your debit card instead. If you do plan to use your credit card for electronic transfers, review the fees and charges at the onset.

woman-phone-card 250x250Where 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 product disclosure statement or terms and conditions under “fees and charges”.

Details of the cash advance interest rate are also included in the “Key Facts Summary” that credit card issuers have to provide when you’re looking at a new card. But 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 to know about a cash advance

Cash advances are not treated the same as a purchase, and if you’re planning to use your card for a cash advance, here’s what you need to know:

  • Minimum withdrawals. While you can use your credit card to pay for the smallest possible purchases, when it comes to withdrawing cash you may have to deal with a minimum withdrawal amount of $20 or more.
  • Maximum limits. It is not uncommon for credit cards to have daily, weekly, and monthly cash advance limits in place. Maximum daily cash advance limits of less than $500 are rather common.
  • Cash advances paid first. Regulatory changes in how credit card providers apply payments ensure that you credit card provider applies your payments towards balances that attract the highest interest. You can be certain that your repayments will go towards reducing your cash advance balance first.
  • High interest. Interest for cash advances are normally 25% APR or more, which is considerably high. This makes cash advances a rather expensive form of credit, and if you’re not in a hurry, getting a personal loan might be a better option.
  • No interest-free periods. Most credit cards give cardholders the ability to make use of an interest-free period if they pay their closing balances in full each month. These interest-free periods apply only on purchases, and not on cash advances. When you use your card for a cash advance, it starts attracting interest immediately.
  • Cash advance fees. In addition to paying a high cash advance rate, you could also have to pay a cash advance fee. Typically this is a flat rate or percentage, for example, $10 or 5% of the transaction, whichever is greater.

Important things to know before getting a cash advance on your credit card

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.

Compare cash advance credit cards

Rates last updated February 23rd, 2018
Name Product Product Description Cash Advance Rate Cash Advance Fee Annual fee
Enjoy 40000
bonus miles after you spend on purchases in the first 90 days — that's enough to redeem for a $400 travel statement credit toward an eligible travel purchase.
26.49% variable
$10 or 5% of the transaction, whichever is greater
$0 annual fee for the first year ($89 thereafter)
Enjoy unique excursions, privileged access to exclusive events and insider opportunities.
26.49% variable
5% (minimum $10) of the amount of each cash advance
$195 ($95 for each Authorized User added to the account)
An 18-month 0% Intro APR period on both purchases and balance transfers, plus zero foreign transaction fees, makes this is a strong well-rounded card.
26.24% variable
$10 or 4%, whichever is greater, will apply on each cash advance transaction
$0
With this card you get a 23.9% variable APR.
29.9% variable
First year: $0. After first year: $5 or 5% of the amount of each transaction, whichever is greater (not to exceed $100)
$75 annual fee for the first year ($0 to $99 thereafter)
A low, variable APR on purchases, balance transfers and cash advances.
10.24% variable
$3 for each cash advance
$0
Get 1% cash back rewards on eligible purchases including gas, groceries, and services such as mobile phone, internet, cable and satellite TV, terms apply.
19.15% to 25.24% variable
$5.00/8% or $10.00/3%, whichever is greater (see terms)
$0 to $75 first year annual fee for the first year ($0 to $99 thereafter)
Give your credit a boost with credit line increase opportunities, a fee may apply.
19.15% - 25.24% variable
$5.00/8% or $10.00/3%, whichever is greater (see terms)
$0 to $75 first year annual fee for the first year ($0 to $99 thereafter)
Access credit even if you have poor or limited credit history.
29.99% variable
$0 first year. $5.00 or 5% of the amount of each cash advance, whichever is greater
$75.00 for first year. After that, $48.00 annually.
The Simmons Bank Visa® Platinum Card offers multiple perks, including one of the lowest available APRs on the market.
13.25% variable
3% of the amount of each cash advance, but not less than $4.00
$0
Get 1% cash back rewards on eligible purchase, terms apply.
19.15% - 25.24% variable
$5.00/8% or $10.00/3%, whichever is greater (see terms)
$0 to $75 first year annual fee for the first year ($0 to $99 thereafter)
Excellent Credit Required - Applicants that do not have excellent credit will not be approved
15.25% variable
3% of the amount of each cash advance, but not less than $4.00
$0

Compare up to 4 providers

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Adrienne Fuller

Adrienne is a Publisher at finder and has one goal: to deliver the accurate and transparent information she wishes she had when she made some of life's important financial decisions. When she's not helping folks save money, she's hiking with her two Catahoulas around her home in San Diego.

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4 Responses

  1. Default Gravatar
    markSeptember 22, 2017

    If I get cash back from a shop when I get my groceries is that treated the same as cash from atm?

    • Default Gravatar
      GruSeptember 22, 2017

      Hello Mark,

      Thank you for your query.

      As you on the page about cash advances, I would just want to clarify if it is cash back that you are asking about or cash advances?

      Please know that cash back and cash advances are two different things.

      Cash Advances:
      “cash equivalent” using your account. These transactions often attract a higher interest rate than purchases. Cash advances also come with other restrictions, such as not being eligible for interest-free days or rewards points. Along with the higher interest rate and restrictions, these transactions can also attract additional cash advance fees.

      Cash Back:
      When you get a percentage of the amount spent paid back to the card holder

      – if you are referring to a cash advance, using your card in a shop to get your groceries will not be considered as a cash advance but instead treated as a retail purchase.
      – If you use your card to draw money to pay for your groceries, that will be considered as a cash advance.
      – if your card has a cash back reward feature on it, you will get a percentage of the amount you spent back on the card

      Hope this helps.

      Cheers,
      Gru

  2. Default Gravatar
    MurhuriSeptember 21, 2017

    I WAS WONDERING DO YOU GUYS DO $500 ADVANCES WITH LOW MONTHLY INSTALMENTS

    • Staff
      LiezlSeptember 22, 2017Staff

      Hi Murhuri,

      Thanks for visiting finder.com. We are a comparison website and we do not offer loan ourselves. You may, however, reach out to any of the lenders listed on this page who offer $500 short-term loan.

      Please make sure you confirm that you meet the eligibility criteria before you submit your application, as rejected credit applications can have a negative impact on your credit score.

      Kind regards,
      Liezl

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