Low Cash Advance Credit Cards
Compare Best Low Cash Advance Credit Cards
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In you are the type of person that likes to use a credit card to withdraw money you should take a look at low cash advance credit cards. They give you direct savings on cash advance interest rates, which will save you a fortune during the year.
Low cash advance credit cards are available in Australia for people that need a card for cash advances. The interest rate is lower on these cards for advances than t is on other cards on the market. They are harder to find but it is well worth your time and effort to apply for this type of card, especially if you use your card often to withdraw cash.
Low cash advance credit cards
There are some things you should know about low cash advance credit cards before you get one so that you know exactly what these cards offer and how to use them wisely. This helpful guide will teach you how to handle these cards so that you can get the most out of them and not end up paying high fees and charges.
Cash advances explained
Using your credit card to get access to money in any form is called a cash advance. Using an ATM machine is not the only way that you can withdraw cash using your card. Any time that you are in the shop and ask for cash back it will be treated as a cash advance. Other transactions that are treated as an advance include:
- Purchasing foreign currency.
- Gambling transactions.
- Purchasing traveller's checks.
A lot of people use their credit card for the above transactions not knowing that they are considered a cash advance. If this happens, it can be very shocking to receive credit card statements with added charges and fees for purchases made.
Low cash advance credit cards treat these transactions the same as they do cash advances. The interest rate is cheaper and the fees and charges can be much lower. Of course, it is always important to find out ahead of time what these charges and fees will be for withdrawing cash so that you don't get a nasty surprise when you open up your card statement.
Using the card for purchases
You can use low cash advance credit cards for purchases in most cases. If you are getting the card primarily to make purchases, however, then you would be better off getting a credit card with a low interest rate for purchases. It all depends on your individual needs and how you expect to treat your credit card in the future.
If you get a standard credit card with a low purchase rate and a high cash advance rate of interest you will be paying extremely high fees and interest on any cash advances you make. When financial institutions promote their credit cards they advertise the interest rate for purchases and hide the rate for cash advances in the fine print.
Credit card providers earn a substantial profit from credit card users that make cash advances. The withdrawal fee for a cash advance can be anywhere between $2 and $10. When you add the interest to that amount it is obvious that making a cash advance can be very costly. That is why there are low cash advance cards available for consumers.
Low cash advance cards benefits
When you use low cash advance credit cards you will benefit not only from a lower interest rate but will also benefit from the other advantages that are listed below.
- Fees and charges - Quite often the fees and charges are much lower for low cash advance cards. In some cases you may even find a credit card provider that does not charge any fees at all for making a cash advance.
- Interest-free time period - Some card issuers will offer a certain amount of time that is interest-free on cash advances. This is an extremely good feature to look for in a card. A standard card will start charging you interest the minute the cash advance is made so the interest starts accumulating right away. If you are given an amount of time to repay the advance you will have time to get the money back to the card company before any interest is added. Finding a card that has a grace period and a low rate of interest can save you a lot of money down the road.
- Interest rate - You will receive a reduced rate of interest for any transactions that are considered cash advances with this type of card. There is a wide range of rates available and if you look hard enough you may be able to find one that is lower than 15%.
Payment allocation
All credit cards have a clause in the contract regarding payment allocation. This is important to note whenever you apply for a card since it can end up costing you hundreds or even thousands of dollars if you are not aware of it.
On most standard cards the allocation of payments is structured a certain way. Usually the balance that has the lowest rate of interest is paid off first. This means that all of your payments go to that debt and the remaining balances remain unpaid and continue to accrue interest.
If you like to make cash advances with your credit card and use a standard card you will end up in a lot of trouble if you can't pay off your debt in full by the end of the month. Interest will continue to be added to your cash advance balance because the purchase balance, in most cases, will be lower.
This can add up very quickly and you may have to face a very high balance the next month. In order to avoid getting into this situation you can apply for low cash advance credit cards. Sometimes card providers will allow cash advance payments to be made first and then balance transfer or purchase balances later on these cards If you choose low cash advance credit cards you will be able to pay off the cash advance balance first, which will handle the debt that is more expensive and leave the other balances to be handled at a later date.
Examining the cost of cash advances
Every credit card issuer will charge a different rate for cash advances. Most cards will charge fees and interest that will begin to accrue the minute the cash advance is made. The fees on a withdrawal transaction are often between 2% and 3% of the cash withdrawn. A minimum amount may be charged on any cash withdrawal, and you can read up on that in the conditions and terms of your contract agreement. In all cases, it is best to use advances very sparingly if possible.
Purchases and cash advances
Balances are always kept separate on a credit card statement and you should know this in advance. Many Australians simply assume that all balances are lumped together and there is only one interest rate to pay. This is partly due to the fact that credit card companies often only mention the interest rate on purchases. There is a big difference between the purchase balance and cash advance balance and they are both treated as different entities by the card companies.
As far as legal representation of the card cost goes, the APR only applies to the rate for purchases and not the rate for cash advances made. Unless advertised, you will have to look at the fine print on your contract to find out what the cash advance rate is for the card you want.
The rate of interest for cash advances
Most credit cards have about a 20% rate of interest for cash advances. You will have to do some shopping to find cash advance credit cards, but it is well worth it. The time and energy spent finding a card and applying for one can save you a lot of money in the future.
Interest-free days
One thing you should definitely look for is how many days you will receive interest-free on any cash advances made. Don't assume when you read the advertising for a card that the interest-free time period mentioned applies to making a cash advance. These are the days that you will receive interest-free for any purchases that you make. Remember, the purchase and the cash advance balance are treated separately and the days that you are given interest-free simply do not apply to a cash advance on a standard card.
Comparing low cash advance credit cards
It is easy to make a comparison of low cash advance credit cards online. Simply find a guide that gives you side-by-side comparisons of interest rates for cash advances and then look closely at the conditions and terms for each card that you find interesting. Start by looking at the terms for the cards with the lowest interest rate for advances and then work your way up until you find the perfect card.
You will want to compare rates, fees and charges on making a cash withdrawal. You will also want to take a look at days that are offered interest-free for advances. Also compare purchase rates, balance transfers details and any other features that you would like to have on your credit card.
How to best use credit cards with a low cash advance rate
You will save the most money by using low cash advance credit cards only when necessary. It is wiser to use your debit card for cash withdrawals whenever possible since you'll save the most amount of money this way. Debit cards have very low fees and charges for withdrawing cash.
This is not to say, however, that having low cash advance credit cards does not serve a useful purpose. They are invaluable if you are travelling and have an unexpected emergency and don't have access to funds back home. You may also need to use it if a crisis happens at home and you need access to some immediate funds and credit. How would you handle such a situation if credit was not available?
Rewards programs
Another thing to keep in mind is that using your low cash advance credit cards for cash advances will not give you any points for rewards. Only purchases made with your credit card will earn you the rewards points that you are collecting. If you get cash back at a shop while you are spending the cash back will not earn rewards and only the purchase will count.
Getting low cash advance credit cards is a money saver for people that tend to use their card for cash advances. Using the guidelines presented above, make a careful comparison between cards before submitting an application so that you are certain about the card. Look at all the features presented and base your decision on what you want the card for and how often you will be using it for different transactions.
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