Your credit card probably comes with the ability to create a transaction called a cash advance. You may consider using it when you want to get cash money from your credit card. If you are interested to use this feature, you should know how to get this cash advance from your credit card. You can go to these ways to get it.
What is a Cash Advance?
A cash advance is actually a short term loan which is an expensive one taken against the credit line on your credit card. It allows you to use your credit card to get a short term cash loan at ATM or a bank.
Unlike a cash withdrawal from your bank account, a cash advance ought to be paid back such as anything else put on your credit card. Think this feature of it as using your credit card to “buy” cash rather than services or goods. Even it is convenient, but it is quite expensive.
Four Costs of a Cash Advance
Usually, cash advance comes with fees around 5% of the advance with a minimum of 10 dollars. For your information, cash advances have higher interest rates compared with regular purchases. Most credit cards usually do not provide a grace period for cash advances. It means that interest starts accruing as soon as you take the cash from the ATM.
Remember to the ATM fee the bank charges you for using their machine. These four things can make cash advance extremely expensive, but still less expensive than some other alternatives such as payday loans. The main key is managing cash advances.
How and Why Can You Get a Cash Advance?
When you carry only credit cards for day to day spending, you can find yourself in a pinch when confronted with a cash-only situation, such as buying lunch from a street vendor, vegetables at the farmers market, or a sandwich at a mom and pop deli.
In this case, a cash advance may be tempting. Some others also turn to credit card cash advance when they need paper money but don’t have enough in their bank account. Well, in this situation, you may use this cash advance from your credit card.
If your credit cards have a PIN, you probably can get a cash advance directly from an ATM. Otherwise, you may take your card to a bank that offers advances throughout your card’s payment network like as Mastercard or Visa. You will have to show ID.
You should be aware that most credit card companies will not allow taking your entire credit line in the form of a cash advance. For many people, a cash advance is capped at a few hundred dollars. It means that you cannot rely on your credit card to provide you with very much cash in the event of an emergency.
Smart Ways to Hold a Cash Advance
People may say credit card cash advances are generally a bad idea. But, there may be a time which you need to access to cash and have no better options. If taking a cash advance is the only idea you have, you can follow these ways to lower the cost and risk of getting into debt.
Read Your Credit Card Agreement
You should read your credit card agreement to understand the fees and also the terms yet the conditions. You have to know the one-time cash advance fee you will pay and the APR that will be applied to your cash advance balance. If you do not understand something, you can call a customer service representative and simply ask.
Use a Cash Advance Only for True Emergencies
Make sure if you use a cash advance just for true emergencies such as unexpected medical expenses. It’s better for you to avoid taking out a cash advance to pay for ordinary everyday items such as groceries and gas. Create a goal to build an emergency fund. So, you do not have to rely on a cash advance in the future.
Know Your Cash Advance Limit
It is important to know your cash advance limit. It is probably less than your credit limit. In order to know it, check your limit on your online credit card account or by calling the automated customer service number on the back of your credit card. If you exceed your cash advance limit can result in overage charges and higher interest rates.
Take out the Cash Advance What You Need
You need to avoid the temptation to withdraw just a little more so you have some extra money. That little extra will just make it harder to repay its advance. But, it’s better to try to take out just one cash advance large enough to cover your expense. This way aims to avoid another cash advance and ATM fee.
Use a Credit Card with 0$ Balance
If you have multiple balance types on your credit card—purchases, cash advance, balance transfer—above minimum payments got to the higher rate balance. Meanwhile, the other balance such as purchases does not decline and instead accumulates interest. It makes it harder to pay back the cash advance balance.
Avoid Purchases until Repaying the Cash Advance
You need to avoid any purchases until the cash advance is repaid for the same reason has discussed above. You also need to avoid making credit card purchases until you can afford a credit card balance.
Cash Advance Alternatives
A symptom of a larger money management problem seems like the need for quick cash. It is like overspending or the absence of an emergency fund. In cases such as this one, repaying a cash advance can take a long time and cost a lot of money.
Before you choose to take out a cash advance you may take a look at some alternatives such as small loans from your bank or credit union, a small loan from a family member or friend, and payday advance from your employer.
You may also choose due to date extension from your creditors, consumer credit counseling, and local emergency hardship programs which typically offered by your local human resource department. These alternative ways may help you cash with lower interest rates.
That’s all about ways to get cash advance on your credit card. Indeed, a cash advance is a way you can do to get cash from your available credit. But, it is not always the best idea. Therefore, you should consider your decision first.
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