Quick answer
A cash advance is money drawn as cash, or its equivalent, against a credit facility rather than spent on a purchase. On a business credit card it usually attracts a fee and interest from the day it's taken, with no interest-free period. The term also describes a merchant cash advance, repaid from card sales, and the upfront portion of an invoice paid by an invoice financier.
Key points
- On a credit card, cash withdrawals and transfers to another account usually count as cash advances
- No interest-free days: interest runs from the day the cash is taken, plus a fee
- A merchant cash advance is a separate product repaid from a share of future card sales
- Invoice finance pays an 'advance' against unpaid invoices, then the balance when the customer pays
In everyday use, a cash advance means taking money itself out of a credit facility, instead of using that facility to pay for goods. Pull $5k out of an ATM on the business credit card, or transfer it from the card into your transaction account, and that’s a cash advance.
In business finance the phrase turns up in three different places, and they behave very differently. Mixing them up is an easy way to misjudge the cost.
Three things people mean by “cash advance”
| Meaning | Who provides it | How it’s repaid | What it costs |
|---|---|---|---|
| Credit card cash advance | Your card issuer, usually a bank | Through the normal card balance | A fee per advance, plus interest from day one |
| Merchant cash advance | A specialist funder | A share of daily card sales or fixed daily debits | A fixed amount set by a factor rate |
| Invoice finance advance | An invoice financier | Your customer pays the invoice | Discount and service fees on the funds used |
The rest of this entry focuses mostly on the first meaning, since it’s the version that catches owners by surprise.
How a card cash advance is charged
Business credit cards work nicely for buying stock and services. Clear the closing balance by the due date and those purchases usually carry no interest at all. Cash advances are treated differently. Issuers such as NAB state plainly that cash advances don’t get interest-free days, and interest is calculated from the moment the money leaves the card.
On top of that, most cards charge a fee each time, usually a small percentage of the amount with a dollar minimum. So two costs start at once: a one-off fee and interest that keeps running daily until the whole balance, including the advance, is paid down. Card payments tend to clear purchases before cash advances, too, which can leave the expensive part sitting there longest.
A one-off draw in a real pinch, cleared inside a week, may only cost a couple of hundred dollars. Used every month to cover wages, it becomes an expensive habit, and lenders spot the pattern on statements at your next application. Sound like your account? It’s worth talking to us about a steadier facility.
A worked example
A Fremantle boutique is waiting on a $9k wholesale order to sell through, and the fortnightly pay run of $6k falls three days before the next big weekend. The owner transfers $6k from the business credit card into the transaction account.
- The card charges a cash advance fee of 3%, which is $180 straight away.
- Interest starts accruing that day on the $6k, with no interest-free days.
- The owner repays the advance within a week, so the total cost is about $180 plus a week’s interest.
Had the same move become a monthly pattern, the yearly cost in fees alone would pass $2,000, before any interest. A business line of credit or business overdraft usually covers recurring wage-week gaps more cheaply.
A note on tax bills
Paying the tax office by card has been a stopgap for some owners, but card payments to the ATO end after 30 November 2026, so that door shuts regardless. Our ATO debt calculator and the guide on paying tax debt with a business loan cover the alternatives.
Related terms
See line of credit, revolving credit, working capital and the comparison of a merchant cash advance versus a business loan.
Leaning on the card to get through the month?
Short gaps happen to good businesses, but there’s usually a cheaper way to bridge them than card cash. Describe the gap in our one-minute enquiry: what you need, how often, and what’s coming in. Sending it doesn’t put an enquiry on your credit report. We won’t scatter your details among dozens of finance companies; a real member of our team weighs up your situation and gives you a ring. Accurate turnover and card balances help us steer you straight to the facility that suits the pattern.
Frequently asked questions
What counts as a cash advance on a business credit card?
ATM withdrawals, over-the-counter cash, and transfers from the card account to another account are generally treated as cash advances. Some cards also class gambling transactions, foreign currency purchases or certain bill payments this way. Your card's terms list exactly what's included.
Do cash advances get interest-free days?
Generally no. NAB, for example, says cash advances aren't eligible for interest-free days and that interest is calculated from when the advance is made. Most issuers work the same way, and a cash advance fee is usually added too.
Is a merchant cash advance the same as a credit card cash advance?
No. A merchant cash advance is a lump sum from a specialist funder, repaid automatically from a share of your future card takings or by fixed daily debits. It's priced with a factor rate and works quite differently from drawing cash on a credit card.
Can I pay my tax bill with a credit card cash advance?
It's usually one of the most expensive ways to do it. The ATO has also announced it will stop accepting credit card payments after 30 November 2026, so card payments for tax debts will no longer be possible. A payment plan or a business loan is normally a better fit.
Does a cash advance hurt my credit score?
The advance itself isn't reported as a separate event, but a higher balance on the card raises your utilisation, and regular cash advances on bank statements can make a lender wonder about cash flow.