Cash Advance Credit Cards – Cash Back Cards
What is a cash advance credit card?
A cash advance involves withdrawing money from your credit card rather than making a purchase. However, it’s often one of the most expensive features of a credit card and you might find that it costs more than it’s worth. If you’re planning on withdrawing money to your credit card, it makes sense to find one that will charge the lowest fees and interest.
It is not just the withdrawal of cash from an ATM that is considered a cash advance, the purchase of foreign currency and travelers checks, gambling and betting transactions, electronic funds transfers are all generally considered cash advances.
How much will a cash advance on credit cost?
Typically, cash advances have higher interest rates than purchases, this can be as high as 50%, meaning a £100 withdrawal would cost you £150. It’s worse than the cost of a short-term loan. However, the lowest rates for cash advances can be in the teens.
It should also be kept in mind that although many buy credit cards come with an interest-free period, cash advances tend to be charged interest from day one.
There will also be a fee charged for taking a cash advance with your credit card, usually around 3%, but the lowest cash advance fee can be as little as 2.5%.
If you use an ATM abroad, you will likely be charged additional foreign usage fees, which can also be as high as 3%.
Should I take out a cash advance?
Although this is expensive and best done as a last resort, sometimes there are emergency purchases that can only be paid for in cash, such as paying tradesmen or car repairs. Remember that if you have a checking account with a debit card, you can usually withdraw money for free this way.
Cash advance credit cards are generally a cheaper way to get a small cash loan than a payday loan. As the repayments are more flexible than that of a personal loan, it might be cheaper on a monthly basis, but will be more expensive in the long run.
But keep in mind that buying something with money withdrawn via a credit card cash advance means you don’t get the purchase protection you get by making a purchase directly with a credit card. credit.
How to best manage a cash advance on credit?
If you are considering taking out a cash advance, try to find the card that charges the lowest rates and fees, the best credit cards for cash advances charge interest as low as around 18%. Which is no more than a typical APR (annual percentage rate) for a purchasing card.
Make sure you make as few cash withdrawals as possible, as many credit cards charge a minimum cash withdrawal fee of around £3. In other words, a cash advance of less than £100 would be charged at a rate of more than 3%.
You can get cards that charge no overseas usage fees for overseas withdrawals, which will reduce the cost if you need to withdraw a cash advance overseas.
If possible, try to avoid making cash purchases, as buying with the card will help you avoid withdrawal fees. Finally, be sure to pay off the balance as soon as possible to avoid paying higher interest rates. High interest rates can make this small cash advance very expensive.