Cash Advance With Credit Cards


    You are making using the cash advance feature when you use your credit card to withdraw cash from an ATM, bank teller or a convenience cheque. Many of us use cash advance to get easy cash when we need it urgently. However, it is something that you should avoid as it comes with high interest and fees and is charged the moment you make the withdrawal.

    Here we will take a look at how cash advance works in detail and other aspects that you may have overlooked.

    Ways to make cash withdrawals

    Cash advance is a form of loan that the bank offers you, on the basis of your card credit limit.

    There are several ways cash withdrawals can be made using your credit card account:

    • Through your bank’s ATM using your credit card and PIN
    • Over-the-counter at the bank branch
    • Online banking by transferring the amount to another bank account
    • Phone banking,
    • financial agency

    Cash Advance Maximum withdrawal limits

    You can withdraw a certain amount up to your credit limit or some percentage of it. The amount of money that you can withdraw depends on the card you own. Here are a few withdrawal limits for different credit card issuers:

    Credit Card Issuer Cash advance/withdrawal limit per day
    HSBC credit cards S$6,000 Find more details
    OCBC credit cards S$20,000 Find more details
    DBS credit cards S$3,000 Find more details
    UOB credit cards S$3,000 Find more details

    Cash Advance Fees

    Most credit card issuers charge a cash advance fee between 5% and 6% of the amount drawn with a minimum charge of S$15 per transaction. The interest on cash advance charged by most banks is around 28% p.a. This interest will be applicable on a daily basis from the date the cash withdrawal is made and until the repayment is made in full. Cash advance does not have an interest-free period.

    Why is Cash Advance Expensive?

    The high interest rates for cash advance is mainly because for credit card companies and banks it is considered as high risk. The high risk is that of the consumer failing to repay the amount. When you purchase anything and charge it to your credit card and subsequently fail to repay, the card company cannot easily regain the items purchased and recover the loss. Hence, banks charge exorbitantly to offset the high risks linked to cash advance.

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