Withdrawing cash on a credit card triggers a flat fee plus daily interest from the moment you take the money out. This article explains every cost involved, why it shows up on your credit file, and what to consider before using this facility.
This article provides general information only. It is not financial advice and does not take account of your personal circumstances. If you are unsure about a financial decision, it can help to speak to a free, impartial money adviser.
What is a credit card cash advance?
A credit card cash advance is when you use your credit card to withdraw physical cash, typically at an ATM. It looks like a debit card transaction in practical terms, but it is treated very differently by your card issuer.
Most UK card issuers also class several other transactions as cash advances: buying foreign currency at a bureau de change, loading money onto a prepaid card, sending money via a payment app linked to your credit card, purchasing money orders, and in many cases gambling transactions.
The key point: anything your issuer defines as a cash advance costs significantly more than an ordinary purchase on the same card.
Why are cash advances so expensive?
Three separate costs stack up at once.
1. A flat cash advance fee
Most UK cards charge a fee the moment you make the withdrawal. This is typically the higher of either a flat amount (often £3 to £5) or a percentage of the amount withdrawn (often 2% to 3%). So on a £100 withdrawal with a 3% fee, you pay £3 immediately. On a £300 withdrawal with the same fee structure, you pay £9.
Exact figures vary by issuer. The fee will be listed in your card's summary box or key financial information document, which is provided at the point of application.
2. A higher interest rate, with no grace period
Purchase APRs on UK credit cards typically sit anywhere from around 20% to over 40% representative APR depending on the product. Cash advance APRs are often set higher still, sometimes by several percentage points.
More importantly, the interest-free grace period that applies to purchases does not apply to cash advances. With purchases, if you clear your balance in full by the payment due date, you pay no interest. With cash advances, interest accrues daily from the transaction date. Paying your full balance at month-end does not remove the interest already accrued on the advance.
3. Payment allocation rules
Under FCA rules, card issuers must apply payments above the minimum to the highest-rate balances first. This is consumer-friendly in principle. In practice, though, if you carry any other balance on your card alongside a cash advance, the interaction of daily interest and payment allocation is worth tracking carefully.
What does "interest from day one" actually mean in pounds?
A concrete example helps.
Suppose a card has a cash advance APR of 30%. You withdraw £200 and carry the full balance for 30 days before paying it off.
- Cash advance fee: 3% of £200 = £6.00
- Daily interest rate: roughly 0.082% per day (30% ÷ 365)
- Interest over 30 days: approximately £4.93
- Total extra cost: around £10.93 on a £200 withdrawal
The numbers scale. Carry the balance for three months rather than one, and the interest element approximately triples. Withdraw more, and the fee percentage keeps adding.
The MoneyHelper website provides worked examples and a loan repayment calculator that can help you model the real cost before you decide.
How does a cash advance appear on your credit file?
UK lenders report credit card usage to the three main credit reference agencies: Equifax, Experian, and TransUnion. Cash advance transactions are included in this reporting.
What a lender reviewing your credit file can see varies. Some lenders' credit systems flag high levels of cash advance activity as a potential indicator of financial stress. There is no single, fixed penalty to your credit score for a single cash advance. But a pattern of regular withdrawals, particularly near your credit limit, can affect how future lenders view your application.
This is sometimes called "cash advance flagging" in financial commentary. The practical point: cash advance use is visible to lenders and, alongside other factors, can influence future credit decisions.
What counts as a cash advance, and what does not?
Typically treated as cash advances:
- ATM withdrawals (domestic and overseas)
- Bureau de change currency purchases
- Loading prepaid or travel cards via credit card
- Money transfers to bank accounts (sometimes called "money transfers")
- Gambling transactions (varies by issuer)
Not typically treated as cash advances:
- Ordinary purchases in shops or online
- Balance transfers (these are a separate product with their own fee structure)
- Contactless payments
If you are unsure how your card treats a specific transaction type, checking your issuer's terms before proceeding avoids surprises on your statement.
What to check before using a cash advance
A few steps are worth taking before withdrawing:
Check your card's terms. The cash advance fee and APR will be in your summary box or key financial information document. The figure may differ from your purchase APR.
Calculate the real cost. Factor in both the upfront fee and the daily interest. The longer you carry the balance, the more costly the advance becomes.
Check whether alternatives are available. An arranged overdraft may carry a lower effective rate. A credit union may offer emergency loans at lower cost. A personal loan for a larger sum may work out cheaper overall. None of these alternatives is right for every situation, but it is worth comparing costs before committing.
Consider your credit file. If you are planning to apply for a mortgage, loan, or other credit in the near future, it may be worth considering how cash advance activity on your file could be interpreted by a lender during their review.
Frequently asked questions
Does interest on a cash advance really start on the day I take the money out? Yes. Unlike purchases, there is no interest-free grace period on cash advances. Interest is charged daily from the transaction date, regardless of whether you pay your full balance at the end of the month.
What is the typical cash advance fee on a UK credit card? Most UK card issuers charge either a flat fee (often around £3 to £5) or a percentage of the amount withdrawn (often 2% to 3%), whichever is higher. The exact figure varies by lender, so it is worth checking your card's key financial information document.
Does a cash advance affect my credit score? The withdrawal is recorded on your credit file. Lenders can see cash advances when they review your file. Frequent use can be interpreted as a sign of financial stress, which may affect future credit decisions. It does not automatically lower your score by a fixed amount.
Is using a credit card at a foreign ATM the same as a domestic cash advance? Usually yes, and sometimes more expensive. Most issuers treat overseas ATM withdrawals as cash advances, so the same flat fee and daily interest apply. Some cards also add a foreign transaction fee on top of that.
Are there cheaper ways to access emergency cash? Possibly. An arranged overdraft, a credit union loan, or a personal loan may cost less depending on your circumstances. MoneyHelper (0800 138 7777) can help you compare options if you are unsure where to start.
What transactions count as a cash advance beyond ATM withdrawals? Issuers typically treat ATM withdrawals, foreign currency purchases, prepaid card loading, money transfers, and sometimes gambling transactions as cash advances. Check your card's terms to confirm what applies.
Sources and further reading
Information in this article draws on guidance published by the Financial Conduct Authority (FCA) and MoneyHelper.
- FCA, rules on credit card charges and payment allocation: fca.org.uk/consumers
- MoneyHelper, credit card cash advances and borrowing options: moneyhelper.org.uk
For the broader picture on how credit cards work, see our credit cards guide.
- Does interest on a cash advance really start on the day I take the money out?
Yes. Unlike purchases, there is no interest-free grace period on cash advances. Interest is charged daily from the transaction date, regardless of whether you pay your full balance at the end of the month.
- What is the typical cash advance fee on a UK credit card?
Most UK card issuers charge either a flat fee (often around £3 to £5) or a percentage of the amount withdrawn (often 2% to 3%), whichever is higher. The exact figure varies by lender, so it is worth checking your card's key financial information document.
- Does a cash advance affect my credit score?
The withdrawal itself is recorded on your credit file. Lenders can see cash advances when they review your file. Frequent use can be interpreted as a sign of financial stress, which may affect future credit decisions. It does not automatically lower your score by a fixed amount.
- Is using a credit card at a foreign ATM the same as a domestic cash advance?
Usually yes, and sometimes more expensive. Most issuers treat overseas ATM withdrawals as cash advances, so the same flat fee and daily interest apply. Some cards also add a foreign transaction fee on top of that.
- Are there cheaper ways to access emergency cash?
Possibly. An arranged overdraft, a credit union loan, or a personal loan may cost less depending on your circumstances. MoneyHelper (0800 138 7777) can help you compare options if you are unsure where to start.
- What transactions count as a cash advance beyond ATM withdrawals?
Issuers typically treat several transaction types as cash advances: ATM withdrawals, buying foreign currency, purchasing money orders, transferring funds to another account via the card, and sometimes gambling transactions. Check your card's terms to confirm what applies.