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.

Credibble offers two fabulous solutions

If you’re preparing to take a mortgage, never apply until you’ve tried our unique and FREE Credibble Home app. Our smart technology will tell you what you need to fix so you avoid rejection. The app predicts when you will be able to buy, for how much and tracks your month-by-month progress to mortgage success. We’ve even added your own mortgage broker, so you get the best deals available.

More focused on your credit rating? Well, get started for free with Credibble’s 24- Factor Credit Check to truly help you improve your creditworthiness and how lenders view you. (Remember: lenders don’t use your credit score! We’ll show you what lenders look for and how to get your credit report in the best shape possible).

Last updated by Robert Edwards, May 2022

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