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 quickly using a credit card. But what is a cash advance, how does it work in Australia, and why do so many people caution against it?

In this guide, we explain the cash advance meaning, how it works, typical fees and interest, limits, potential risks, and alternatives. The goal is to help you build financial literacy so you can make more informed choices about short-term borrowing.

We’ll also outline why many Australians look for more predictable options (such as personal loans) instead of relying on credit card cash advances, which can be costly.

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’s essentially borrowing money from your available credit limit and turning it into cash — often with higher costs and typically no interest-free period.

Transactions usually treated as cash advances 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
• Gambling transactions, including betting apps and casino purchases
• Purchasing cryptocurrency (this can vary by provider)
• PayPal or other “cash-like” transactions (depending on how the transaction is processed)

Cash advance vs standard purchase

Because your CMS can’t display tables, here’s a simple side-by-side comparison in a readable format.

Standard purchase (using your card to buy goods/services):

• An interest-free period may apply (depending on the card and your payment behaviour)
• Usually a lower interest rate than cash advances
• Fees may be lower or may not apply the same way
• Appears as a normal purchase on your statement

Cash advance (using your card to get cash or cash-like transactions):

• No interest-free period in most cases
• Often a higher interest rate than purchases
• Usually includes an upfront cash advance fee
• Often appears as a separate transaction type and 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. It usually appears on your statement under a separate section (for example, “Cash Advances”).

Here’s how they commonly work in practice:

✔ Interest starts immediately
Unlike many purchases, there is typically no grace period. Interest may begin from the moment you withdraw or the transaction is processed.

✔ Higher cash advance interest rates
Cash advance rates are often higher than standard purchase rates (your provider sets the rate).

✔ How repayments may be applied
Some credit card providers apply repayments to lower-interest balances first (for example, purchases). This can mean a cash advance balance may take longer to reduce unless you pay more than the minimum. Policies vary by provider, so it’s worth checking your card’s terms.

✔ Appears as a separate balance
Statements often show purchase balance, cash advance balance, fees, and interest charges separately.

What are the cash advance fees and interest rates?

A cash advance often comes with two common costs:

1. Cash advance fee

Many providers charge either:

• A flat fee (for example, a few dollars), or
• A percentage fee (for example, a few percent of the amount), or
• Whichever is greater

2. Cash advance interest rate

Cash advance rates can be higher than purchase rates and can vary widely depending on the card and provider.

Example of a cash advance cost (illustrative only)

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

• 3% cash advance fee (=$30), and
• 22% p.a. cash advance rate, with interest charged for 30 days

Approximate interest for 30 days:

• $1,000 × 0.22 ÷ 365 × 30 ≈ $18.08

Approximate total after 30 days (fee + interest) = $48.08
This example doesn’t include additional interest if the balance isn’t repaid, and it’s not a quote—your card’s costs may differ.

Cash advances can become expensive quickly — especially if the balance isn’t reduced promptly.

Cash advance limits

Your cash advance limit is often lower than your overall credit limit.

What may determine your cash advance limit:

• Your total credit limit
• Your available credit
• Your provider’s risk assessment
• Daily ATM withdrawal caps
• Card type (some cards may restrict or block cash advances)

You can usually find your cash advance limit in your banking app, online banking, or your credit card statement. Some providers also restrict certain cash advance types, including some gambling-related transactions.

How cash advances impact your credit score

A cash advance usually doesn’t appear as a separate “cash advance” item on your credit report, but it may affect your credit profile indirectly.

How cash advances may hurt credit:

• Higher utilisation ratio: Using a large portion of your limit can reduce available credit, which may affect your score.
• Higher repayment burden: Higher interest costs can make repayments harder to manage. Missed or late payments can negatively affect credit scores.
• Risk perception: Frequent reliance on cash advances may signal financial stress to some lenders when assessing applications.

Cash advances generally don’t help build credit history on their own and can make budgeting harder if costs add up.

Pros and cons of credit card cash advances

Pros

• Immediate access to cash
• Convenient (ATM or online, depending on the provider)
• No separate loan application
• May help in rare emergencies

Cons

• Often high interest rates
• Usually no interest-free period
• Additional cash advance fees
• Can increase debt quickly
• May affect credit utilisation and repayment affordability

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

A cash advance might be considered if:

• You have no other way to access money
• You only need a small amount
• You expect you can repay it quickly

However, cash advances are often one of the more expensive ways to borrow. For many people, it can be worth considering alternatives first—especially for larger expenses or ongoing shortfalls.

Credit24: An alternative to credit card cash advances

Before using a cash advance, you may want to consider options such as:

• Speaking with providers about payment plans or hardship support
• Using an overdraft (if available and appropriate for your situation)
• Asking trusted friends or family
• Using emergency savings (if you have them)
• Accessing free financial counselling (for example, the National Debt Helpline)

Another option some people consider is a Credit24 personal loan, which is structured with scheduled repayments and disclosed costs. Whether it’s suitable depends on your circumstances and eligibility.

Why Credit24 may suit some customers

• Fixed interest rates
• Predictable weekly, fortnightly or monthly repayments
• Online application process
• Assessment based on your circumstances and eligibility
• Funds may be provided after approval and completion of required checks
• Borrow up to $10,000
• Regulated under Australian Credit Licence 422839

Credit24 follows responsible lending obligations, meaning we assess whether a loan is suitable for your situation.

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.