Cash Advances (aka credit card cash withdrawals)

May 9, 2019 Icon 3 mins read
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Cash advances, that is, withdrawing cash on a credit card, substantially differs from withdrawing cash on a debit card. You’d be forgiven for thinking otherwise.

So, why should you avoid cash advances on your credit card? There are two main reasons:

First; the charges.

You’ll notice a hefty fee that applies for cash advances. If you tend to ignore cashpoints that charge you, you don’t want to withdraw on your credit card.  The charge depends on the card you have, so it’s worth checking the small print, but it is usually around the 3% mark, and often has a minimum charge.

Your interest rate can also be different for cash advances – again, read the small print to find out what these are for you.

Secondly; your creditworthiness.

This surprises everyone I tell. Lenders don’t like to see that you use your credit card for cash advancs.

Why?

If you take out money on a credit card, it implies to lenders that you are out of money, full stop. You have nothing left in your bank account, you’ve exhausted your arranged overdraft, and now you’re happy to take the fees mentioned above to get hold of some cash.

This may not be true, you might just be stood at the bus stop and notice that you don’t have a debit card with you, but if lenders see it enough times, they may start to wonder.

What counts as a cash withdrawal or cash advance?

You don’t have to go to an ATM to make a withdrawal. You know that, but you might think that your card issuer isn’t able to see other advances for what they are.

Here are some types of transaction that might count as a cash advance:

  • Buying foreign currency
  • Gambling and betting
  • Cashback at tills.

The rule of thumb is that if you’re not sure, call your provider and ask them.

Always check the small print of your credit card, so you’re always aware of charges that will occur.

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Last updated by Robert Edwards, May 2022

About the author
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Zoe Stabler

Zoe is a cat owner, ice skater and Christmas enthusiast living in London.

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