In addition to making purchases, most credit cards also allow you to withdraw money, in the form of cash, from your credit card account. In Australia, this is commonly called a cash advance.
A cash advance could involve taking cash out of your credit card account at an ATM or transferring money from your card to a transaction account via online banking. Cash-equivalent transactions, such as money transfers, travellers’ cheques and gambling, are also counted as cash advances.
Cash advances can be convenient if you’re short of cash or in case of emergency, but they typically cost more than making transactions with your card.
Credit card providers often charge a separate interest rate for cash advances that’s higher than the standard variable purchase rate on a card. If you decide to use your credit card for a cash advance, it could cost you more than using your card to make a purchase of the same value.
Cash advances also commonly have fees, which typically range from $2 to $10 or a percentage of the amount you withdraw (for example, between 2% and 5%), whichever is greater. The interest is charged from the day of your cash advance, as there’s no interest-free period like there is on purchases.
For these reasons, it pays to be familiar with all the different fees and interest rates that come with your credit card. And if you’re not happy with your current rates, maybe it’s time to find yourself a new card.
If you’d like to learn more, compare the interest rates on Westpac credit cards.
For tips on managing credit cards, read 6 steps to help you pay down your credit card debt.
Things you should know
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