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What is a cash advance and how does it work?
Credit cards allow you to withdraw cash using an ATM – but it’s important to understand how interest and fees are charged on cash advances.
Westpac credit cards also allow you to withdraw cash at an ATM in New Zealand and overseas. Interest is then immediately charged on a cash advance, which differs from the purchase interest rate. If you choose to withdraw cash overseas, fees may also apply. Here’s what you need to know about cash withdrawals on your credit card:
Interest on cash advances is usually higher
The interest rate on a cash advance from a credit card is usually higher than the interest rate for purchases. Take a look at all our credit card interest rates – you’ll see the purchase rate is different to the cash advance rate.
Interest on cash advances starts adding up immediately
By paying your credit card statement closing balance in full by the pay by date each month, you won’t pay interest on your purchases.
However, cash advances are different; they incur interest on the daily balance of each cash advance from the day you withdraw the money. The interest adds up each day, increasing the outstanding balance on the credit card until the day you pay that amount in full.
More affordable ways of borrowing money
The best way to spend cash is from a transaction or savings account. However, if you need to borrow money, a credit card cash withdrawal may not be the best choice.
A cash advance on your credit card is a less cost-effective than other types of borrowing. You may want to consider how much it will cost you to borrow money.
Clear the balance at the end of the month
If you have made a cash withdrawal on your credit card, paying back the whole balance of your next statement will help prevent interest charges building up further. If you can’t cover the balance using money you have available now or in the near future, you could consider another way to manage your money more effectively.
Quasi-cash
If you use your credit card to purchase goods or services that are similar or easily converted to cash (otherwise known as “quasi-cash” transactions), this is a cash advance and interest is charged from the date of the transaction until the date you pay the transaction off in full. Keep in mind the interests rate on cash advances is usually higher than the rate on purchases.
Examples of quasi-cash transactions
The most common types of quasi-cash transactions include:
- making gambling transactions or topping up online gambling accounts;
- sending money to another person, for example money transfer or telegraphic transfer;
- purchasing foreign currency or travelers cheques;
- topping up funds on a rechargeable gift card or prepaid card; and
- buying cryptocurrency and securities (including, shares and bonds)
Transactions that are not considered quasi-cash include:
- topping up prepaid mobile phones;
- topping up prepaid transport cards;
- purchasing raffle tickets; and
- making donations to charities.
How to manage ATM cash withdrawals
You can choose to turn cash advances on or off for your credit card and it's easy to do.
Log in to Westpac One digital banking.
- If you're using the Westpac One app, go to the Cards tab, select the card and slide the ‘ATM Cash Withdrawal’ toggle to ‘on’ or ‘off’.
- If you're using an internet browser, go to ‘Manage my cards’, select the card you want and slide the ‘Cash Advance’ button to ‘on’ or ‘off’.
Remember, this will not disable the ability to make quasi-cash transactions.
We can help.
Balance transfers
Find out how to consolidate outstanding balances from hire purchase, store cards or another bank’s credit card to a Westpac credit card1.
Personal loan for debt consolidation
Find out how a personal loan for debt consolidation can combine multiple debts into a single loan, with one regular repayment, an end date and no early repayment fees.
Salary Splitter
Salary Splitter is a simple, way to move your money into the accounts where you want it to go. You can set it to divide your income into as many as six different accounts.
Managing Your Money webinars
Our Managing Your Money webinars cover a range of topics and allow you to learn about finances from home.
Things you should know.
1 Balance Transfer Terms and Conditions and lending criteria apply. All applications are subject to Westpac approval. You cannot transfer a balance from a Westpac card or loan. Payments made to your Westpac credit card will first be applied to charges and interest accrued, then to cash advances and purchases, followed by balance transfers. All new purchases, cash advances and any unpaid interest or fees will incur interest at the standard interest rate in accordance with the card's Conditions of Use. You can transfer up to 95% of your available credit card limit. Your card must remain within its credit limit after the balance has been transferred. Balances cannot be transferred to a Mastercard® BusinessCard/Purchasing Card. Balance transfers do not earn Airpoints Dollars™ or hotpoints®. You must close any facilities indicated in this application as being repaid by the balance transfer.
Credit Cards: Eligibility criteria, Lending criteria, terms and conditions apply. Conditions of Use for the applicable card apply. Rates, transaction and services fees apply. Overseas cash advances and foreign currency fees may apply.
Personal Loans: Westpac’s eligibility criteria, lending criteria, terms and conditions apply. An establishment fee of $0 may apply. You’ll need to be 18 or older and a New Zealand citizen or permanent resident. If you’re not a New Zealand citizen or permanent resident but you’re working in New Zealand, or you don’t meet the other criteria, we still may be able to help.
This material on this page is provided for information purposes only, without taking your particular financial situation or goals into account.
Mastercard is a registered trade mark and the circles design is a trade mark of Mastercard International Incorporated.