Sometimes you may need instant access to cash, and if you do not have any to hand you can often use your credit card in order to withdraw cash. There are a couple of big drawbacks to using your credit card in this way.

One of those drawbacks is, that depending on your credit card provider the interest charged for cash advances can be anything up to 22%. The other issue is that normally cash advances do not have the same interest free benefits of other credit card transactions. So where you may pay for a purchase in a shop, and get up to 55 days interest free, with a cash advance you will begin paying interest straight away.

Something to be aware of, is that lenders do not only class cash withdrawals as advances. There are certain other transactions that will face the same charges.

What is a Cash Advance?

  • If you are in a grocery store, and whilst paying for your shopping you decide to get cash back at the same time, the cash back element of the transaction may well be classed as a cash advance by your provider.
  • Any withdrawal made from your bank ATM, or any other “foreign” ATM will also be charged as a cash advance.
  • If you transfer cash from your credit card into any other bank account, then that will almost certainly be viewed as a cash advance.
  • Some card providers will charge any transaction at a gambling establishment, be it live or online as a cash advance.
  • Any travellers cheques you buy may be subject to a cash advance fee.

There are other instances that may well be subject to charge, and if you are in any doubt you are best ringing your card provider, and asking them what is a cash advance within their terms?

Stay Informed

It is very important to be fully aware of the charges involved with a cash advance. The best way to avoid any charges is to not use your credit card to make any sort of cash withdrawal be it from an ATM, or a cash back transaction.

Decide whether you really need the “live” cash in your hands rather than paying for goods, or services with the card. If you can use your credit card then do, as it will be much more cost effective and you will have the benefit of any interest free days that come with the card.
Remember, if you hold a debit card then there is normally no fee for cash withdrawals, and it will work out much cheaper than using the cash advance feature of your credit card.