With a cash advance, you can use your credit card to obtaina short-term loan either from an ATM or a bank. A cash advance must be returnedback, unlike withdrawing cash from a regular bank account. You can alsoconsider your credit card to buy some cash at a cost instead of goods at ashopping mall.
Although it isexpensive but, it’s instant andconvenient especially when in need of hard cash.
How to get a cash advance?
You can find yourself in a pinch when you need hard cash andyou are a plastic money user. In such case cash advance comes like a saver withwhich you can pay to street vendors with paper money. On the other side, it can also be helpful when you don’thave money in the account but you need itinstantly.
You can receive cash advances directly from an ATM if yourcredit card has a PIN. If not, then don’t panic there is another way to dothat. Just take your card to a bank that offers cash advances on cards such asa MasterCard or a Visa. Don’t forget to take your ID with you, you will have toshow that.
Remember, usually,credit cards don’t allow you to take a Cashadvance at full credit limit. However, you can withdraw a few hundred bucks but it varies from person toperson. So, in short, you must not relyon a credit card with the expectation of a big cash withdrawal.
Do cash advances are expensive in nature
It all depends on the issuing entity of your card. Most of thetime yes, it is an expensive business.However, obtaining a cash advance is a convenient task and sometimes also comewith a charge-free option for a few days. But, typically consumers do have tobear some expense.
Fees: Cardissuers generally have the authority to set fees on a cash advance. Some cards have a flat fee structure while othershave a mix of percentage and max limit.
ATM fees: Suchfees are not from issuers rather your bank or ATM owner determine the fee forhandling your transactions.
Interest: Thatcan be an expensive business because interest rates are often higher especiallywith cash advances if compared to the ratefor purchases. Moreover, the internetstarts to accrue instantly with cash advances and there is no grace period asits case with normal buying.
Cash Advance should only be used in extreme emergency case. While you must keep track of Credit Utilization while using your card because it can hurt your credit score. The cost linked with cash advance can be a sign that bank knows you are in dire financial condition.
How to avoid a cash advance
If facing a tight pocket and also in need of emergency cashwhile don’t want to use a cash advance.There are some options which you can try. Although none of them is ideal but, you can end up with cash at the lowest cost than a cash advance.
Overdraft fromchecking account: One can use that option instead of cash advance just useyour debit card to overdraw your account. You may have to pay a fee but you cansimply avoid interest.
Borrowing fromfriends: This may feel awkward to you, but you can save much on the cost ofborrowing.
In nutshell, Cashadvance is a very expensive short-term loan from your credit card. So, you mustconsider any other option and put cash advance as a last resort. It is alsoimportant to bear in mind that if you use cash advance then its a very strongsign for credit agencies that you are in financial distress.