A Cash Advance is the withdrawal of borrowed cash using your credit card, either across the counter at bank branches or through cash machines.

Will a Cash Advance hurt my credit rating?

Some lenders do report Cash Advances to the Credit Reference Agencies, meaning any withdrawals using your credit card can feature on your Credit Report, detailing the amount borrowed and the number of times you’ve done so.

You can check your Credit Report with checkmyfile free for 30 days, then just £14.99 per month. Our Multi Agency Credit Report shows your data from Equifax, Experian, and TransUnion, ensuring nothing important is missed.

Cash Advances are not strictly a negative marker – like a late payment or default – but they can harm your creditworthiness, depending on the prospective lender’s criteria. Like payday loans, Cash Advances can be seen by some lenders to signal ‘desperation’ for finance – something they might want to avoid in a customer. Having many Cash Advances, especially of large amounts, in a short period may make it harder to be accepted for credit.

How much do Cash Advances cost?

They are often subject to a handling fee of around 2% plus the applicable interest rate set by your card issuer.

Cash Advances usually start to accrue interest from the date of the transaction, rather than the statement date for normal purchases. Most lenders also charge higher interest rates for cash advances than they do for ordinary card purchases.

Some banks allocate any payments you make to lower interest rate purchases first and continue to charge for Cash Advances until the total balance on the credit card is paid in full.

The term ‘Cash Advance’ can also be used to describe a payday loan – a small short-term loan of several weeks designed to tide individuals over until their next payday. These loans typically carry extremely high interest rates and these days are strictly regulated to protect consumers.

Is there a minimum withdrawal limit?

This will vary from card provider to card provider, but generally, there will be both a minimum and maximum withdrawal amount. If you are unsure, check with your card issuer before attempting to withdraw funds.