Low Rate Cash Advance Credit Cards

Almost all credit cards come with a cash advance feature which allows the credit card holder to withdraw money from an ATM. This is a feature that many Australian credit card holders use on regular basis. However, using a cash advance will typically attract an interest rate of around 20%. Use the comparison table below to find credit cards with cash advances at lower interest rates.

Your Guide to Cash Advance Credit Cards

Most credit cards can be used for cash advances, transactions in which money is withdrawn from an ATM or over the counter at bank branches, and also includes other transactions such as cash back at supermarkets, purchasing foreign currency and if you use your credit card for gambling. Cash advances are itemised separately to normal purchases on your credit card statement and usually attract a higher rate of interest. Cash advances are generally also exempt from interest-free days and rewards programs, and can attract a cash-handling fee.

If you are likely to use your credit card for frequent cash advances it is important to find a deal with a low cash advance rate and fees to minimise the cost. They should be avoided if you can, but it is a useful feature when you need access to cash. Taking the time to compare the various deals and rates on offer is well worth the effort.

When you are looking for a new credit card, and when you start using the card, it is crucial that you understand how the card functions and what interest and fees are applied to your account. The banks generally advertise their cards with an Annual Percentage Rate (APR), but this is usually the interest rate applied to purchases. The cash advance rate may be hidden in the terms and conditions, and is typically a higher rate. Unlike purchases, cash advances start accruing interest immediately and continue to until you repay the money. Cash-handling fees can also be applied to cash advances, usually a percentage of the transaction. All these rates and fees vary greatly between different credit card providers and individual cards – make sure you study all the details to find the very best deal for you.

Three Tips on using Cash Advance Credit Cards

Clear your monthly balance in full As with any credit card, it is best to always try to clear you monthly balance in full to avoid paying too much interest. This is particularly important if you are using your card for cash advances since the interest is charged at a higher rate and these transactions are usually exempt from interest-free days.

Pay in advance of your statement: Because cash advances start attracting interest as soon as the transaction is made, it is a good idea to repay the debt as soon as possible. Instead of waiting for your monthly statement, make use of your online facility to check your account and repay the cash advance as quickly as you can. Checking your account online is also a good way of tracking your spending and ensuring that you’re not getting into too much debt.

Using your credit card abroad: If you travel and are likely to use your card in foreign countries, you should be aware that different rates and fees can apply to both cash advances and purchases made when abroad. Make sure you are aware of all the terms and conditions when using your card for any foreign transactions.

Typical Cash Advance Credit Card Features

A high cash advance rate: This is the rate of interest that is applied to the part of your balance that represents cash advances. The interest starts to accrue from the date of the cash advance. Typically this rate is, often significantly, higher that the purchase rate.

Cash-handling fee: The banks often charge a fee when you use a cash advance. This is usually a percentage of the amount of money withdrawn, and is typically up to 3%.

Purchase rate: This is the rate of interest applied to standard purchases, and is one of the most important considerations when comparing credit cards. Most transactions are everyday purchases and payments, so even if you plan to use your card for cash advances you should take note of the purchase rate.

Annual fee: Many cards feature an annual fee – a yearly charge that pays for the maintenance of your card and any extra features. If there is an annual fee, make sure that it is not so large that it negates savings on the card’s other features.

Payment allocation: This is also known as the order of payments, and determines the order in which different items are cleared when you make repayments on your bill. Clauses in the terms and conditions can dictate that items that attract lower interest (such as purchases) are paid off first, and those attracting more interest (such as cash advances) are paid last. In this way the bank can ensure they are charging higher interest on any outstanding balance. Make sure you understand the payment allocation and all other terms and conditions before applying.

Other features: Even if your priority is finding a credit card with a low cash advance rate, you will probably want to use it for other purposes, so check out all the other features included in the deal. These include balance transfers, rewards schemes, introductory offers, insurance covers and other benefits.