Loading cash onto your credit card can help avoid interest, but it isn’t always so straightforward. You might accidentally draw too much at an ATM, or a direct debit takes your account into interest-accruing credit, or your bank might you the extra cash is going to be treated like a cash advance. In any of these cases, you could be charged the horrendously high cash advance rate, typically 20% or more, on almost all types of credit card.

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While there are a lot of forum discussions and travel blogs on this topic, it’s important to understand the deal with your own credit card in any given situation. That means reading and understanding all relevant terms and conditions, and making sure you follow them to avoid being charged the cash advance interest rate. Ultimately, the nature of a credit card is to supply you credit to be paid back, not to act as a ‘holding’ account for your cash reserves.

If you load up $2000 and spend $2,100 you’ll be using $100 of your credit limit, and can either be charged cash advance interest rates on the $100, or the full amount depending on the timing of the purchases and the bank’s own policy and the card.

Use your credit card, and other travel cards, wisely

Most lenders state that you should contact customer service to deal with any excess balance. While that is the case, it does not mean customers will be prevented from carrying a positive balance.

The golden rules of putting cash onto your credit card

Here are a few key rules to keep in mind:

• Try not to keep a positive balance for too long (for example, short term holiday spending only)
• Check your balance regularly and make sure you know what will be coming up on your statement
• Plan your spending so that you don’t dip into your credit limit at all
• Leave some cash in your everyday or savings account that you can quickly transfer if you discover you’ve dipped into your credit limit
• If in doubt, just make a purchase and transfer the correct amount across on the same day. You can now do this online just about anywhere in the world

Beware of additional fees

For travel credit card options and further information, read our page on cards with no international transaction fees. Most already come with a cash advance fee up to a few dollars (or 2-3% of the transaction value). Factor that in when planning your withdrawals. Currency conversion and other fees may also apply.

Take out more cash inside the bank

A great way to get your hands on more cash, especially if travelling in a country which doesn’t allow you to take out much from the ATM (including, for example, Bali and much of Asia) is to go into the bank if you see that it’s open and withdraw up to $1000 in AUD using your passport. This gives you plenty of cash, and you can divide it among you and your family members, and take some immediately to your hotel room so you don’t keep it all in one place.

When it comes to the practice of ‘positive loading’ your credit card, the only assumption you can safely make is that you shouldn’t ever assume this won’t lead to interest charges on your account. It depends which bank you’re with, and which credit card you have with that bank. If you’ve been charged, expect to spend time on the phone pleading your case to get something back – and remember it’s all according to the policy of the bank and what terms and conditions you signed up for.