A cash advance is when you take out cash from a credit card account. You may be able to do this, but before you consider it it's worth looking at the pros and cons.
While it may be as easy as taking money from your debit card, there are many more factors you need to consider before you withdraw cash using your credit card. This includes the damage it can do to your credit score and any charges your provider applies.
If you've already got a credit card account, you may be able to withdraw cash from your account. However, not all credit cards allow cash withdrawals. There are also lots of alternatives to consider before you take money out with a credit card.
In this article, you'll learn all about cash advances, the benefits and drawbacks of withdrawing cash from your credit card, and three of the best credit cards with low fees.
| Card Name | Score | Details |
|---|---|---|
| 1. Capital One Platinum Credit Card | ★★★★★ | Learn more |
| 2. Vanquis Chrome Credit Card | ★★★★★ | Learn more |
| 3. Barclaycard Forward Card | ★★★★★ | Learn more |
What is a cash advance credit card?
A cash advance isn’t a credit card type but a feature. Most credit cards allow you to withdraw cash from your credit card, and how much money you can withdraw depends on your provider.
Due to the nature of cash advances, banks don't recommend withdrawing cash from your credit card because of the fees involved and the damage it can do to your credit score.
Cash advances are not just taking money out of an ATM either, some transactions still count as cash advances even if you don't use your credit card to withdraw money.
The following transactions are cash advances:
- Making a mortgage payment with your credit card
- Buying travel money using your credit card
- Using your credit card to pay a utility bill
- Betting, gambling, buying lottery tickets, and using your credit card at casinos
- Buying gift vouchers
What should you consider when taking out a cash advance?
When looking to make a cash withdrawal from your credit card, you should consider the following factors:
- Your credit history: cash advances will leave a mark on your credit file, negatively impacting your chance of getting future credit. You must make repayments on time to avoid harming your credit score further.
- Interest rate: you'll pay daily interest on cash advances, so you'll pay back more money than you withdrew. It's a good idea to calculate how much you'll be charged each day and consider the overall cost.
- Extra fees: on top of the cash advance fee, there may be charges for withdrawing small amounts, so it's essential to check the terms and conditions of your contract before withdrawing money.
- Credit and withdrawal limits: most credit cards will have a cash advance limit, so you may be unable to withdraw your entire credit card balance.
The benefits and drawbacks of a cash advance
Before you decide to use your credit card for a cash advance, here are some of the pros and cons to consider:
Benefits
✔️ Much like a debit card, you can withdraw cash as easily as going to an ATM, putting your credit card in, and selecting the amount you'd like to withdraw.
✔️ If you require quick access to cash, you can withdraw some money from your credit card whenever needed. You don’t have to wait for banks to open or fill in any extra applications.
✔️ Depending on the provider, you can withdraw your entire credit balance.
Drawbacks
❌️ There are almost always cash advance fees when you take cash from a credit card.
❌️ Depending on the provider, you may be charged other fees, such as using your credit card at an ATM.
❌️ Interest rates, such as APR, are usually higher on cash advance transactions. Interest rates for withdrawing cash can range from 18% to 30%, and most cards are on the higher end nearing 30% APR.
❌️ You start paying interest on withdrawing cash from the day of the transaction; you'll see the total amount you owe at the end of the month when you receive your credit card bill.
❌️ Cash advances aren't consumer protected, so if you lose the money or it's stolen, you won't be able to retrieve it.
❌️ Taking out cash with a credit card will harm your credit score.
Top 3 credit cards that allow cash advances
We've explained how cash advances work, and the warnings around them, but if you are going to make one, these cards have low fees and APR.
1. Capital One Platinum Credit Card
Capital One Platinum Credit Card
Max Credit Limit
Representative % APR (variable)
28.9% APR
-
For people with bad credit or building credit.
-
£200 to £1,500 credit limit.
-
No annual fee.
Representative Example – If you spend £1,200 at a purchase interest rate of 28.94% p.a. (variable) your representative APR will be 28.9% APR (variable). Your APR and credit limit may vary depending on your circumstances.
Capital One's Platinum Credit Card is a credit builder that helps you create a positive credit file. This card is our number one choice because it offers the lowest APR rates for cash advances. So, when you take money from the account, you’ll pay the least percentage of interest in comparison to the other cards on our list.
Your credit balance depends on your credit history.
However, credit limits range from £200 to £1,500. If you can put off withdrawing cash and use your credit card for purchases, you can do so with 0% interest for the first 56 days.
2. Vanquis Chrome Credit Card
Vanquis Bank Chrome Credit Card
Credit Limit
Minimum £500
Representative % APR (variable)
29.5% APR
-
Rates of 26.5% APR (variable) or 29.5% APR (variable) depending on individual circumstances.
-
Credit limit £500 to £1,500 (subject to status).
-
£10 minimum repayment.
Representative Example – If you spend £1,200 at a purchase interest rate of 29.5% p.a. (variable) your representative APR will be 29.5% APR (variable). Your APR and credit limit may vary depending on your circumstances.
The Vanquis Chrome credit card offers a balance between £500 and £1,500 and is ideal if you want to build your credit score. The more you use this credit card and pay back the balance on time, the more likely your credit limit will increase.
Vanquis provides credit reviews every five months.
You can control your finances from the Vanquis banking app, which allows you to manage your card and finances from your smartphone.
3. Barclaycard Forward Card
Barclaycard Forward Card
Credit Limit
Minimum £50
Representative % APR (variable)
33.9% APR
-
0% interest on purchases for 3 months (from the date you open your account).
-
Credit limit £50 to £1,200.
-
Minimum repayment £5.
Representative Example – If you spend £1,200 at a purchase interest rate of 33.9% p.a. (variable) your representative APR will be 33.9% APR (variable). Your APR and credit limit may vary depending on your circumstances.
The Barclaycard Forward Card gives you a personalised credit limit based on your credit report. This card is ideal for helping you stay within your credit utilisation and minimise the chances of getting into long-term debt.
Credit limits start from £50, and the maximum is subject to application, financial circumstances, and borrowing history.
So, if you’re starting out on building your credit report, this card may be the right one for you. This card comes with a nice perk of up to five months of free Apple subscriptions such as Apple Music, Apple Fitness, and more.
The best alternatives to cash advances on your credit card
You would be wise to think twice about credit card cash advances and there are better options available with fewer drawbacks (and much lower fees).
They include:
- Balance transfers: you can apply for cards that allow you to transfer a credit balance from one card to another. These cards are ideal if you're trying to reduce credit card debt.
- Personal loan: a personal loan is a cheaper option, they're usually straightforward, and you'll know how much you need to repay from the offset.
- Money transfer credit card: this credit card allows you to transfer money from the credit card to your current account. Some credit card providers have a 0% interest-free period you can take advantage of.
- Travel card: designed to help you make safe purchases abroad without worrying about carrying or losing money. If you plan to make a cash withdrawal from your credit card for travelling abroad, consider applying for a travel credit card.
- Credit union: if you need cash quickly, you may be able to take out a loan from a credit union. They tend to have more favourable rates than payday loans.
The Verdict
Making cash advances on a credit card can be costly and it is not recommended. You can harm your credit score, which can make it harder to take out credit in the future. It's also a very costly way to borrow money.
If you are considering it, check with your credit card provider first to see if cash withdrawals are allowed and what fees and interest you'll pay before taking money from the account.
You can also speak to a free debt charity if you're struggling financially, such as Step Change.
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