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Most credit cards give you the ability to get cash or a “cash equivalent” using your account, and this action is defined as a cash advance. Cash advances often have 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.
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.
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.
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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.
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.
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.
If you plan on using your credit card for cash advances, consider the following questions to help keep costs to a minimum:
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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If I get cash back from a shop when I get my groceries is that treated the same as cash from atm?
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
I WAS WONDERING DO YOU GUYS DO $500 ADVANCES WITH LOW MONTHLY INSTALMENTS
Hi Murhuri,
Thanks for visiting Finder. We are a comparison website and we do not offer loans 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