There are a lot of travellers and savvy spenders out there who talk about loading up a credit card with cash, so that it goes into a positive balance, before you spend the money and bring it back down to $0. The appeal is easy to see if you’re going away for a week or two and want to put your spending money on your credit card – and this can be a way to save on interest when you put the cash there before you spend it. The actual ‘how to’ process is as simple as transferring money from your everyday account or savings account to your credit card to give it a positive balance.
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 ensuring that you follow them to avoid being charged the cash advance interest rate. 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 will 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.
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.
Here are a few golden rules to keep in mind:
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.
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 are with, and which credit card you have with that bank. If you have been charged expect to spend time on the phone pleading your case to get something back – and remember it is all according to the policy of the bank and what terms and conditions you signed up for so it’s up to you to be aware.
Founder of Creditcard.com.au. Roland has extensive knowledge about credit cards in Australia. Known as a credit card expert, he has been featured on tv and in various publications. Some popular offers on our site right now include the ANZ Low Rate. Ever popular with no annual fee first year, low purchase rate and 0% balance transfer. Have a look also at the 0% balance transfer HSBC offer with no balance transfer fee, plus an annual fee waiver each year you meet a spend criteria.