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Credit card cash advance fees on the rise

Paloma Kubiak
Written By:
Paloma Kubiak

The cash advance fees on several mainstream credit cards have risen over the past five years, making it more expensive to withdraw cash or carry out transactions that are treated in the same way.

Many credit cards allow holders to withdraw cash, such as at an ATM in the same way you would using your pin and a debit card.

However, users could be hit with an immediate cash advance fee, as well as the usual APR from the minute you take out cash, meaning it can be an expensive way to borrow money.

Some other credit card transactions may also be treated as a cash advance, including buying foreign currency and those related to betting or gambling.

Overall, taking cash out on your credit card should be seen as a last resort and only done in emergencies.

A comparison of credit cards by business information and ratings site Defaqto, revealed that in the last five years, several providers have increased their cash advance fees.

According to Katie Brain, consumer banking expert at Defaqto, three of the top 10 providers for credit cards have increased their cash advance fees, while the Post Office and two sub-prime cards have also done the same:

The Halifax reference is for the credit card, not the Halifax Clarity credit card.

Brain said: “To make a cash withdrawal will now cost you from 99p to £2 more per £100 withdrawn. So, it is worth shopping around for the most cost-effective credit card for you, as some cards have no fees for cash withdrawals. Barclaycard Rewards credit card and Halifax Clarity credit card both have no cash advance fees.”

Andrew Hagger of Moneycomms added that Halifax, MBNA and Lloyds Banking Group now all charge 5% with no minimum amount.

He said: “MBNA has charged £5 for many years along with Virgin Money (which at one time was part of MBNA). Lloyds and Halifax seemed to have adopted the MBNA 5% rate after Lloyds took it over.”

However, Defaqto also found that the number of cards which do not charge cash advance fees has increased from four in August 2017 to seven today.

The following providers and products do not charge cash advance fees: