Credit cards with low cash advance rates

What's a low credit card cash advance rate?

• Most credit cards have cash advance interest rates that range from 19.99% p.a. up to 21.99% p.a.
• But there are a few cards with cash advance rates as low as 9.99% p.a.

Watch out for cash advance transaction fees

Even if you get a card with a low interest rate, you'll still have to pay a cash advance fee for these transactions. Cash advances also won't be eligible for any interest-free days your card may offer for standard purchases, which means interest will be charged from the time the transaction is made until it's paid off in full.

What transactions are counted as "cash advances" on a credit card?

If you withdraw cash from an ATM, or something similar like buying foreign currency, or using your credit card to gamble, that's a cash advance transaction.

With these transactions you get charged interest immediately, at the cash advance rate. And you get charged a cash advance fee (usually 3% of the purchase).

Our expert says: Cash advance transactions are almost always a bad idea

"Sometimes in life you can't avoid withdrawing cash on your credit card. You might be overseas or shopping somewhere that only accepts cash and can't use a debit card. But in general it's a bad idea. Use cash or a debit card if you can, because cash advance transactions incur a fee and interest charges apply right away (unlike with most card spending that gives you interest free days to pay it off)."

Richard Whitten

Money Editor

What else should I keep in mind when comparing these cards?

• Cash advance fee. This fee is charged every time you make a cash advance transaction. It’s usually presented as the greater of a fixed dollar amount or percentage. For example, $3 or 3% of the transaction, whichever is greater.
• Purchase rate. Remember that the standard variable cash advance rate may not be the same as the purchase rate, so it's important to look at both.
• Annual fee. Credit card annual fees can range from $20 to $400 or more. When considering this cost, weigh up the features of the card and consider whether the benefits will offset the annual fee, so that you can choose a product that's affordable for you.
• ATM fees. Some credit cards charge a separate fee when you withdraw money from an ATM. Fees from ATM operators may also apply – especially if you're getting cash out with your credit card overseas.
• International transaction fee. Most credit cards charge a fee of 2-4% for transactions made in a foreign currency. If you plan on using a low cash advance rate credit card for transactions overseas or online (such as foreign ATM withdrawals or Internet gambling), make sure you also consider this fee and how it could affect the overall cost of a cash advance.
• Overseas fees for cash advances. Note that international transaction fees can also apply when you use your card to make purchases through international websites. Some credit cards also apply different cash advance fees for domestic and international transactions.

Example: How much would it cost to withdraw cash using a credit card?

Let's say you need to withdraw $1,000 cash from a credit card. You plan to pay it off over 6 months, making $200 repayments. There's a 3% cash advance fee.

• Your total advance is $1,030 (cash withdrawal plus the fee).
• With a 21.99% cash advance rate, you end up paying $97 in interest and the cash advance fee.
• With a 9.99% cash advance rate, you end up paying $60 in interest and the cash advance fee.

Remember: In this scenario, you'd still have to pay the cash advance fee with either of the cards, and the costs would be different if you already had a balance or spent more with the card. You can use a credit card repayment calculator to estimate the costs for other cash advances or balances on your card.

Frequently asked questions

• Why do cash advances attract high interest rates?

  Unlike regular credit card purchases, cash advances give you access to actual money or an equivalent. In this sense, they are similar to more traditional loans but don't require you to apply for more credit. Cash advances could suggest to a lender that a person is desperate for funds or needs cash to make a questionable purchase. As a result, most credit card providers view cash advances as "higher risk" transactions and apply higher interest rates and fees.

• Do I have to repay a cash advance within a given time period?

  You can continue making minimum monthly payments until you clear the balance completely. But by doing so you would end up paying a lot in interest. Ideally, you should aim to pay the balance off in full as quickly as possible to keep costs to a minimum.

• What other options do I have to get money in a hurry?

  You can consider getting a secured or unsecured personal loan – both tend to charge lower interest rates when compared to credit cards. How quickly you get access to funds depends on the lender.

• Can I get a cash advance without a credit card?

  If you need cash and don't want to use your credit card, another option is to look at short-term loans, including online cash advances. This gives you a way to get a cash advance (or loan) even if you don't have a credit card. These loans often won't charge interest but instead they have very large fees. You could end up paying a $200 fee on a $1,000 cash advance. This makes it even more expensive than a credit card.

  So remember to consider your options carefully and, if you need help, consider free support services that could help you manage your financial situation, like the National Debt Helpline's financial counselling service (call 1800 007 007).

Written by

Richard Whitten

Money Editor

Richard Whitten is Finder’s Money Editor, with over seven years of experience in home loans, property and personal finance. His insights appear in top media outlets like Yahoo Finance, Money Magazine, and the Herald Sun, and he frequently offers expert commentary on television and radio, helping Australians navigate mortgages and property ownership. Richard holds multiple industry certifications, including a Certificate IV in Mortgage Broking (RG 206) and Tier 1 and Tier 2 certifications (RG 146), as well as a Graduate Certificate in Communications from Deakin University. See full bio

Richard's expertise

Richard has written 605 Finder guides across topics including:

• Home loans
• Property
• Personal finance
• Money-saving tips