We explain why withdrawing cash with a credit card to pay for household bills can end up being costly. As household finances come under strain from rising living costs, many people resort to making credit card cash withdrawals to make ends meet. Previous uSwitch research suggested that over one million people make cash withdrawals with their credit card to pay off mortgages, loans and household bills.
Yet many consumers are still unaware of the true cost of taking out cash with a credit card, believing it to be no different to using a debit card. Whether you make a credit card cash withdrawal from a cash machine at home or abroad, you’ll pay interest from the day you make the withdrawal.
This is because unlike standard credit card purchases, cash withdrawals are never interest-free. Withdrawals made overseas also incur a cash handling fee, a foreign exchange fee and a higher interest rate with no interest-free period. The best alternative by some distance is to withdraw cash with a debit card, which is always cheaper than any credit card cash withdrawal. If you have no other option but to make a credit card cash withdrawal, you’ll need to clear your balance as soon as possible to avoid racking up huge interest charges.
Taking money out of an ATM using a credit card to provide a temporary cash advance is something that 18% of women do, but 23% of men also take cash advances this way.
Clearly, more men than women fail to understand that a cash advance is not the same as a cash withdrawal from a checking account or that interest is chargeable from the day the cash advance is taken rather than only accruing interest if the bill isn’t cleared in full the next month.

Information about cash advances indicates that people who take cash advances often believe that they’re cheaper than withdrawing cash using a debit card or that cash advances are less expensive than credit card purchases. The group that seems to make the worst financial decisions centred on cash advances is the 18-24 year olds. The big leap forward with cash advances comes from the 45-54 and 55+ age groups which show an improved understanding of the true costs of cash advances versus alternatives, and habitually take out cash advances much less frequently. It has probably escaped the notice of the many people who wouldn’t think of taking a cash advance, and most certainly with those people who do, but cash advance fees have been going up lately.
If travelling frequently, then a card that offers minimal or low international withdrawal fees might be ideal. One of the best credit cards for low cost cash advances currently is the Halifax Clarity Card. In the case of a cash advance using a product like the Halifax Clarify Card, then cash advances can represent cheap credit if the interest rate is not excessive because there is no initial cash advance fee.
As one receives an education in using a credit card, it’s possible that many of us go through a learning curve that can get expensive over time. I also confirmed that the transaction would be treated as a purchase and not a cash advance; the latter I knew would incur a fee and interest until it was repaid.
Six weeks later, I received a bill for my credit card where the bill that I’d paid off at the electrical store was treated as a cash advance, with fees and interest tacked on. The bank said that the credit card bearing their brand was independent of the bank itself and so they weren’t responsible for wrong advice given within the branch.

Cash withdrawals are also often charged at a much higher APR than the standard rate paid on purchases. Overdraft charges are generally much cheaper than withdrawing cash with a credit card, while you might also get the benefit of an interest-free period in which to clear the balance. The fees and interest rates for the majority of credit cards that offer cash advances are extremely high on a short-term basis.
Men are 1.4 times more likely to believe that taking out a credit card cash advance is less expensive that making a retail purchase from a store or online. The average fee for taking a cash advance – even before factoring in interest costs – is now ?3.34 each time. If taking frequent or infrequent cash advances, but wish to do so with the lowest costs in the market, then a good financial comparison site can help with this requirement too. However, working professionals still sometimes find that cash advances have their place to offer cash in a hurry for just a few pounds if repaid quickly. This card charges no cash withdrawal fees at all, including from any ATM in the world (there may be a local ATM fee for the country), and no annual charge. I walked into my local bank and asked the teller whether I would be able to pay this bill on their branded credit card as I had both a checking account and a credit card with the same bank at the time.

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