What is a credit card cash advance?
A cash advance is withdrawing cash on your credit card rather than making a purchase, however it is often one of the most expensive features of a credit card. If you are planning to withdraw cash on your credit card it makes sense to find one that will charge the lowest fee and interest.
It is not only withdrawing cash from an ATM that is considered a cash advance, buying foreign currency and traveller's cheques, gambling and betting transactions, electronic cash transfers are all usually considered cash advances too.
What will a credit cash advance cost?
Typically, cash advances have higher interest rates than purchases, this can be as high as 50% meaning withdrawing £100 would cost you £150. However, the lowest rates for cash advances can be in their teens.
It’s also worth bearing in mind that whilst many purchase credit cards come with an interest free period, but cash advances tend to be charged interest from day one.
There will also be a fee charged to take a cash advance with your credit card, typically about 3% but the lowest cash advance fees can be as little as 2.5%.
If you use an ATM overseas you are likely to be charged additional foreign usage fees on top of this, these can also be as much as 3%.
Should I take out a cash advance?
Whilst it is expensive and best left as a last resort, sometimes there are emergency purchases that can only be paid in cash, such as paying tradesmen or car repairs.
Credit card cash advances are typically a cheaper way of getting a small cash loan than a payday loan and as the repayments are more flexible that a personal loan it could be cheaper on monthly basis, but will be more expensive in the long term.
But bear in mind that buying something with cash withdrawn via credit card cash advance means you don't get the purchase protection you enjoy with by making a purchase directly with a credit card.
How to best manage a credit cash advance?
If you are planning to take out a cash advance, try and find the card that charges the lowest rates and fees, the best credit cards for cash advances charge interest as little as around 18%. Which is no higher than a typical APR for a purchase card.
Make sure to make as few cash withdrawals as possible as many credit cards charge a minimum cash withdrawal fee of about £3. Effectively meaning a cash advance of anything below £100 would be charged at a higher rate
You can get cards which charge no foreign usage fees for overseas withdrawals which will reduce the cost if you have to take out a cash advance whilst abroad.
If possible try to avoid making purchases in cash, as buying with the card will help you avoid the withdrawal fees. Finally make sure to pay off the balance as soon as possible to avoid being charged higher rates of interest.
Does uSwitch compare all the credit cards on the market?
We compare credit over 100 credit cards from all of the major banks and credit card providers.
However, we do not compare all the credit cards that are available in the UK.
This is because some credit card providers have offers that are only available exclusively through their own website or branch, or through other comparison websites - in the same way some credit cards are exclusively available through uSwitch.
There are also many credit cards that are only available to people in member organisations and clubs.
What does it mean if a card is listed as an “advertisement” or “promotion”?
We sometimes receive payment from card providers to display their cards in prominent locations.
These are adverts and are designed to be distinct and separate from the other cards on our comparison tables. We hope this makes it clear which cards are top-of-table deals and which cards are paid for promotions.