Do you want to withdraw money with your credit card? This can be expensive, so it’s handy to look at cards that have competitive rates and cash advance fees.

Whether you’re on the dusty streets of N’Djamena in Chad, or on Oxford Street in Sydney, you might need the cash, and fast. Relax, this is not a scene in Bourne’s identity – rather, a credit card cash advance could be a convenient way to access hard cash. This can be useful in situations where you need cash quickly or if you are somewhere where debit cards are not accepted.

But be aware that cash advances can be expensive and you are definitely paying for the convenience.

Compare low rates and cash advance fees

Compare credit cards with competitive rates and cash advance fees below.

What is a credit card cash advance?

Credit cards are a pretty good product in that they are essentially a revolving loan, and a great feature of a credit card is the ability to get a cash advance. This means that you can withdraw money using your credit card, which is technically money that you don’t actually have.

Essentially, a cash advance is a short-term loan to withdraw money, and often with a corresponding interest rate. Credit card cash withdrawal fees (fees) are often around 3%, while interest rates are usually much higher than the already high interest rates on credit cards, which are around 17 to 18% per year according to CommSec. Plus, cash advances usually don’t have interest-free periods, so you pay that interest right away.

Why use a credit card cash advance?

You might be wondering why not just withdraw money using your debit card, that is, the money you actually own? Well, that’s a good question. If you think of a cash advance as a short-term loan, the picture starts to get a lot clearer.

A cash advance can come in handy in the rare event that somewhere doesn’t accept a debit card and you don’t have the money in your bank account to use an ATM. A common scenario can be if you are traveling and only use your credit card and need to pay a cash deposit for a hotel.

Now you can associate such backward financial technology with so-called third world countries, but one of the most popular destinations that has surprisingly downgraded payment technology is the United States. There, cash is still king (a lot of people still get a physical paycheck!). There, a hotel in a small town or even a large town might only accept cash, for example.

Another use of a cash advance is that it is pretty much an instant loan. Even the fastest payday lenders can often take over an hour to approve your credit application, and even charge a higher interest rate than a credit card. Many payday lenders have a maximum credit limit of $ 5,000. Frankly, you might need more than that if you’re paying for a Jason Bourne hit, but who are we to judge?

Do cash advances affect or hurt your credit score?

Cash advances do not inherently affect your credit score, but you should consider why you are withdrawing money with your credit card. Failure to repay what is essentially a short-term loan will likely affect your credit rating, as well as your ability to secure a loan in the future.

Advantages and Disadvantages of Credit Card Cash Advances

Before you take out your credit card, there are a few things you should know about cash advances.

Benefits of a cash advance

• Flexible and practical: You can get what is essentially an instant loan right from an ATM. However, if you do this overseas, you may have to pay international fees for the privilege of doing so.

• Could be cheaper than other short term loans: Despite the high interest rates, a cash advance could still be cheaper than other short term loans. Always check the finer details.

Disadvantages of a cash advance

• No days without interest: Unlike regular card purchases, there probably won’t be any interest-free periods with a cash advance, meaning that interest accrues the moment you withdraw the money. This is why it is important to consider your need for a cash advance and whether you can pay it back as quickly as possible.

• High interest rates: Interest rates on cash advances often match the purchase rate of the credit card, which can exceed 20% pa

• The costs add up: There is often a fee for the privilege of making a cash advance, usually in percentage or in dollars, whichever is greater (eg 3% or $ 3).

• The game can count as a cash advance: You might want to think twice before breaking your credit card on your sports betting account. Aside from play money that you don’t actually own, this could be considered a cash advance, which could sting you when the bill comes in.

See also: Credit cards that block gambling

The two cents from Savings.com.au

Be careful when using a cash advance. With interest often accumulating the moment you withdraw money, it’s easy for a relatively small amount of money to get out of hand.

Also consider your motivations for thinking of one in the first place. While they can be useful in a dead end, a cash advance is a fairly expensive way to pay for frivolous purchases, even though they seem cheaper than other types of loans. Nonetheless, cash advances can be useful in some situations – just watch the interest rate, as well as the fees, and know what you’re doing.

Photo by Timeo Buehrer on Unsplash