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Cash Advances: Everything You Need to Know

Cash Advances: Everything You Need to Know

Borrowing a certain amount of cash as an advance is possible in most credit cards. You cannot likely borrow up to your regular limit though your cash advance limit maybe a few hundred dollars or thousands of dollars. By contacting your card issuer or by looking at your credit card statement, you can find how much is your limit for a cash advance. 

The credit card company typically charges fees and interest on the cash advance since you are borrowing money. You don’t withdraw it from a checking account where you already have the funds and compared to a regular purchase, the rate is usually much higher. Your credit utilization ratio or the percentage of available credit you’re using will ding especially if you’re using it for a cash advance and you push its limit too high. 

Choose the card you can pay off the fastest or with the lowest cash advance interest rate if you have multiple cards. Also, cards that already have a high balance should never be used for cash advances. 

Where can you get a cash advance?

There are a few different ways to get a cash advance if you think it is the best solution for your current situation:

  • Walk-in or In-person: If you want to receive a cash advance with your credit card, you can visit your credit union or bank to ask for it. Keep in mind that in addition to the separate fees and interest your credit card company charges, they will also charge you a fee for the advance. 
  • ATM Machines: You can go to the nearest ATM machine, insert your card, enter your PIN and receive cash, but that’s if you have a PIN for your credit card. However, it may be best to go into your financial institution to get the advance if you need to withdraw a few hundred dollars since most ATMs limit you to a certain amount of dollar amount of transactions per day. You can call your credit card issuer to ask for a PIN if you did not receive one when you had your credit card. You have to request for a PIN as soon as possible if you anticipate having a future cash advance needs since getting a PIN may take a few business days. 
  • Convenience checks: For you to have the lesser hassle of getting your cash advance, many credit cards provide convenience checks. At your bank or credit union, you can cash or deposit the convenience check that you fill out the same way you would to a regular check. Compare to an ATM, you can withdraw more this way. 

How much do you think it costs?

A steep price tag usually comes with credit card cash advances. Compared to the interest you would pay on a standard credit card purchase, typically you will pay more and sometimes several percentage points more. Cash advances’ interest rates can top 25%. Know all the associated costs and read your cardholder agreement before you take out a cash advance. 

Some alternatives to credit card cash advances

It would be best to consider alternative options first before getting a credit card cash advance because the cost of borrowing one can be so high. 

  • Family and friends: From a loved one or friend, you can ask to borrow needed cash. Remember that you should stick to a formal agreement that you have to create. 
  • Lending circle: One way to help you build your credit, lending circles allow you to borrow money for little to no interest in a form of friends and family borrowing. 
  • Debt consolidation loans: A way for you to pay one monthly payment instead of many or several different lenders, debt consolidation loans consolidate your existing debts into one new loan and usually at a lower interest rate compared to your existing debt. Aside from helping you eliminate the need for a cash advance, this alternative can also help you keep more cash in your pocket each month. There are two other avenues to consider if you are not successful with any of the above options though the other two avenues could end up costing you more and they don’t offer many advantages over cash advances. 

If you don’t have any choice

Cash advances are usually fast and easy to obtain if you have a credit card. But the cost of borrowing is so steep due to the sky-high interest rated and fees. If you are in a true financial emergency and have exhausted other more affordable options, that is the time you can turn to a cash advance. Be sure also to check if you can repay it quickly and on time. 

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