You’re likely familiar with credit card interest rates. You know that interest rates determine how much you’re charged (in addition to fees) for the privilege of using your credit cards. You probably also know that balance transfer rates can be different than your normal purchase interest rates, and that they can help you save on interest when you transfer your balance to a new card. But do you remember to look at cash advance interest rates when comparing credit cards? You should!

What are cash advance interest rates?

A credit card’s cash advance interest rate is the annual percentage rate (APR) you’ll be charged if you use your credit card to withdraw cash. While this rate can be the same as the purchase rate (in rare instances, such as with the Bank of Queensland Low Rate card), most credit cards have a higher interest rate for cash advances. The St. George Vertigo credit card, for example, has a whopping increase of 9% (10.99% for purchases and 19.99% for cash advances)!

Why do cash advance interest rates matter?

There are a few reasons you should know a credit card’s cash advance interest rate before filling out an application. For example:

1.    The cash advance rate might apply to more than ATM withdrawals.

You’ll generally be charged the cash advance rate when you use your credit card to purchase traveller’s cheques or make over the counter bill payments (like with the NAB Visa Mini credit card).

2.    Cash advance rates can affect balance transfers.

While policies vary from one credit card company to the next, some credit cards will charge you the cash advance rate on transferred balances not repaid during your introductory period. For example, that could mean going from a 0% balance transfer rate for six months to a 20% or higher cash advance rate on your remaining balance.

3.    You won’t get interest free days on your cash advance rate.

While you may have up to 55 days interest free on new purchases, it’s very likely that offer won’t apply to your cash advances. In other words, you’ll be charged interest immediately after taking out a cash advance rather than being able to pay it off interest free later during that statement period.

Cash advance interest rates are often tucked away in the fine print, so it’s important to review your terms carefully before applying. Remember that cash advances have other issues as well, such as not being eligible for rewards points. Keep these cash advance caveats in mind, and you won’t find yourself facing any unpleasant surprises when you get your first credit card statement.