What Is a Cash Advance and How Does It Work in Australia?

What Is a Cash Advance and How Does It Work in Australia?

If you’ve ever needed money urgently, you may have come across the term cash advance—especially when searching for ways to access cash using a credit card.

But what is a cash advance, how does it work in Australia, and what costs or considerations should you understand before using one?

In this guide, we explain the meaning of a credit card cash advance, how it works, typical fees and interest, common limits, potential risks, and alternatives you may wish to explore. The aim is to help support financial literacy so you can make more informed choices about short-term borrowing.

What is a cash advance on a credit card?

A cash advance is when you use your credit card to access cash rather than paying for goods or services.

It involves using part of your available credit limit to withdraw cash or complete a transaction treated as a cash-equivalent by the card provider. Cash advances may involve different interest rates, fees, and repayment rules compared with standard card purchases.

Transactions that are often treated as cash advances can include:

• Withdrawing cash from an ATM using your credit card
• Withdrawing cash at an EFTPOS terminal
• Transferring money from your credit card to a bank account
• Buying money orders or traveller’s cheques
• Some gambling transactions, including betting apps or casino payments
• Purchasing cryptocurrency (depending on the provider)
• Some “cash-like” digital wallet or payment service transactions, depending on how they are processed

How a transaction is classified can vary between card providers, so it’s important to review your card’s terms and conditions.

Cash advance vs standard purchase

Because this CMS can’t display tables, here is a simple comparison in text format.

Standard purchase (using your card to buy goods or services)

• An interest-free period may apply depending on the card and your payment behaviour
• Interest rates may differ from those applied to cash advances
• Fees may be structured differently or may not apply in the same way
• The transaction typically appears as a standard purchase on your credit card statement

Cash advance (accessing cash or cash-equivalent transactions)

• An interest-free period often does not apply, depending on the card terms
• Interest rates may be higher than those applied to purchases
• A cash advance fee may apply
• The transaction may appear as a separate category or balance on your statement

How do credit card cash advances work?

When you take out a cash advance, the amount is deducted from your available credit limit. The transaction usually appears on your credit card statement as a separate category, such as “Cash Advances”.

Here are some common features of cash advances:

Interest may begin accruing from the transaction date

Unlike many standard purchases, interest on cash advances often begins accruing from the date the transaction is processed. Whether an interest-free period applies depends on the specific card terms.

Cash advance interest rates may differ from purchase rates

Credit card providers typically set a separate interest rate for cash advances. This rate may differ from the purchase rate on the same card.

Repayment allocation may vary by provider

Some credit card providers apply repayments to balances with lower interest rates first (such as purchases), depending on the card’s terms. This can affect how quickly a cash advance balance is reduced if interest is being charged at a higher rate.

Statements may show separate balances

Some credit card statements show purchase balances, cash advance balances, fees, and interest charges separately to help customers understand how different transactions are treated.

What are the cash advance fees and interest rates?

Cash advances may involve two main types of cost.

1. Cash advance fee

Some providers charge a fee when a cash advance transaction occurs. This may be:

• A flat fee
• A percentage of the amount withdrawn
• The greater of the flat fee or percentage fee

The exact structure depends on the card provider and product.

2. Cash advance interest rate

Cash advance interest rates can vary depending on the credit card and provider. These rates may differ from the interest rate applied to purchases.

Example of a cash advance cost (illustrative only)

The following example is simplified and for illustration only.

Imagine you withdraw $1,000 from a credit card that charges:

• a 3% cash advance fee, and
• a 22% p.a. cash advance interest rate

Cash advance fee:

$1,000 × 3% = $30

Approximate interest for 30 days:

$1,000 × 0.22 ÷ 365 × 30 ≈ $18.08

Approximate total cost after 30 days:

$48.08

This example is illustrative only and does not represent a specific product. Actual costs depend on your credit card’s terms, interest rate, repayment timing, and applicable fees.

Cash advance limits

Many credit cards include a cash advance limit, which may be lower than the overall credit limit.

Factors that may influence the limit include:

• Your total credit limit
• Your available credit
• The provider’s internal policies and risk settings
• ATM withdrawal limits
• The type of card you hold

Your cash advance limit is usually listed in your credit card statement, online banking portal, or banking app.

Some providers may also restrict certain types of cash-equivalent transactions.

How cash advances may affect your credit profile

A cash advance transaction usually appears as activity on your existing credit card account rather than as a separate credit account.

Credit reporting systems generally focus on factors such as:

• repayment history
• account balances and limits
• overall credit usage
• missed or late payments

Using a large portion of your available credit limit can increase your credit utilisation ratio, which some lenders may consider when assessing future credit applications.

More broadly, lenders may review account behaviour, balances, and repayment patterns when assessing a new application.

Pros and cons of credit card cash advances

Pros

• Access to cash using an existing credit card
• Transactions can often be completed at ATMs or through banking services
• No separate loan application may be required

Cons

• Interest may begin accruing from the transaction date
• Cash advance interest rates may differ from purchase rates
• Additional fees may apply
• Costs may increase if the balance remains outstanding

Bottom line: Should I get a cash advance in Australia?

A cash advance may provide access to funds using an existing credit card. However, the costs, interest rates, and fees associated with cash advances vary depending on the card and provider.

Before using a cash advance, it may be helpful to review your card’s terms and conditions and consider the potential costs.

In some situations, people may explore alternatives depending on their circumstances.

Credit24: An alternative option some people consider

Before using a cash advance, some people explore other options such as:

• speaking with service providers about payment plans or hardship support
• using an available overdraft facility
• accessing emergency savings if available
• seeking support from trusted family or friends
• contacting free financial counselling services such as the National Debt Helpline

Another option some consumers consider is a personal loan offered by licensed lenders, which may involve scheduled repayments and clearly disclosed costs. Whether a loan is appropriate depends on individual circumstances and eligibility.

Why Credit24 may suit some customers

Credit24 offers personal loans that may include:

• Fixed interest rates
• Scheduled weekly, fortnightly or monthly repayments
• An online application process
• Assessment based on individual circumstances and eligibility
• Funds that may be provided after approval and completion of required checks
• Borrowing amounts up to $10,000

Credit24 operates under Australian Credit Licence 422839.

As an Australian credit licensee, Credit24 must comply with responsible lending obligations under Australian credit law. This includes assessing whether a credit contract is not unsuitable for a consumer before entering into the loan.

Apply now:
https://www.credit24.com.au/au/apply/login

Disclaimer

IPF Digital Australia Pty Ltd, trading as Credit24, ABN 59 130 894 405. Australian Credit Licence 422839.

The information in this article is general in nature and does not consider your objectives, financial situation, or needs. Lending criteria, fees, and charges apply. For product details, eligibility requirements, and full terms and conditions, visit www.credit24.com.au.