Need quick access to cash? You may be tempted to take out money with your credit card. This is called a cash advance. Learn why it’s an expensive option and what some alternatives are first.
Need quick access to cash? You may be tempted to take out money with your credit card. This is called a cash advance. Learn why it’s an expensive option and what some alternatives are first.
A cash advance can mean different things. It can mean taking out money with your credit card at a cash machine or your bank. But it can also mean using your credit card to:
Most but not all credit cards let you have a cash advance. It’s worth checking the terms of your credit agreement to see if a cash advance is something your lender allows. The terms should also tell you what fees and interest rates you’ll pay on cash advances.
Credit card cash advances are expensive. You’ll pay a higher interest rate on cash advances than on your card purchases. On top of this, you may be charged a cash advance fee of around 2-3% of the advance amount. And you’ll usually pay another 2-3% fee if you get the cash advance abroad or in a foreign currency.
Cash advances don’t have a ‘grace period’. This is a gap of around 20 to 55 days between when you buy something on your card and when you start paying interest on it. A grace period gives you a chance to pay off purchases before being charged interest. But with a cash advance, you’ll be charged interest right away — and you’ll pay it every day until you’ve repaid the advance in full.
It’s simple to withdraw cash from your credit card. You can enter your credit card and PIN at a cash machine, take your card into your bank branch, or ask for cashback when you use your card in some shops.
Paying household bills with a credit card is usually straightforward as well. You can give your card details to your supplier over the phone or online.
Paying your mortgage on a credit card is more complicated. Most mortgage providers won’t accept credit cards. You may be able to get around this by paying the money into your bank account first. It’s best to avoid paying your mortgage with your credit card if you can, as you’ll pay interest on both. If you’re struggling to pay your mortgage, consider talking to your provider or a charity like National Debtline to find the best solution.
Yes, you can withdraw cash on your credit card when you’re in another country. Remember, you’ll typically pay a foreign transaction fee of 2-3% of the amount you take out. Also your credit card may not give you the best exchange rate. It’s often cheaper to use a travel card instead.
The amount you can get with a cash advance depends on things like your credit card limit, your current balance, and your daily withdrawal or transaction limit.
You can’t take out more than your available credit. And you can only use so much of your credit limit for cash advances — typically between 20% and 60%.
There may be a maximum number of times you can get a cash advance. Also, your lender may set a minimum amount, so very small cash advances may not be an option.
Yes, you can withdraw or transfer money from your credit card almost instantly. You’ll need your PIN if you’re going to a cash machine. Make sure you’re not about to go over your credit limit or the maximum number of cash advances you’re allowed.
The most expensive debt on your credit card will always be paid off first. This will usually be your cash advance as it comes with a higher interest rate. You’ll be charged interest on your cash advance immediately, so it’s wise to have a plan to pay it off quickly.
Remember, it’s important to always make the minimum monthly payment. This is part of using your credit card responsibly.
Yes. Getting a credit card cash advance will leave a mark on your credit report. Lenders may see this mark when you apply for credit with them. Your score is a reflection of how lenders see you, so it will go down each time you get a cash advance. But there are several ways you may be able to improve your score again.
Some people find credit card cash advances useful when they need cash urgently. Only use one if you’re sure you can pay it back. Because of their high rates and cash advance fees, it’s worth considering your other options first.
It’s often cheaper to get cash from a money transfer card rather than a cash advance from your existing card. Some money transfer cards offer a 0% rate for a set promotional period. It’s a good idea to pay off the card before this period ends and you’re put on a higher rate. You may have to pay a fee for each transfer.
An arranged overdraft can also give you access to cash. It’s a form of credit that’s attached to your bank account. There’s no set repayment plan and you’ll pay interest or fees until you pay back what you owe. Make sure your bank agrees to an overdraft before you go overdrawn.
A personal loan is another option. The lender will pay a lump sum into your bank account. You’ll make set repayments each month plus interest. You’ll usually need a good credit score to get accepted for a personal loan.
Don’t need cash in hand? Consider a purchase card, interest-free card or buy now pay later deal. These can help you spread the cost of a purchase at low or 0% rates for a set period. Once the introductory period ends, you’ll be put on the lender’s standard rate which is higher.
Search purchase card, 0% cards and other types of credit card with Experian. We help you compare offers from across the UK market. And we calculate your chances of approval to help you apply with confidence.
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