If you need urgent cash and you don’t have enough in your bank account, a cash advance is a way to provide answers to your problems. It can be as simple as buying food from a street vendor or some fruits or veggies at the market where credit cards are not accepted. Or it may be an emergency that requires you to put some cash upfront.
Lots of credit cards offer cash advances. Some alternative lenders can give you cash with fast approval and very quick funding.
Cash Advance on Credit Cards
Cash advances on credit cards are short-term loans against your card’s line of credit. Credit card companies usually offer this option to allow their customers to borrow money without putting in collateral and a tedious credit check. You can avail of this through the following easy ways:
From an ATM
Credit cards usually have PINs that you can enter on an ATM and withdraw money from. This is very convenient as you don’t even need to show ID, and you only need to bring your physical card to make withdrawals.
From a Bank
If going to the bank is more convenient for you, then you can go with this route, too. You need to bring some IDs to prove your identity. Keep in mind as well that some cash advances are less than the credit limit, so you’ll be capped a few hundred dollars should you decide to make a cash advance.
From a Convenience Check
Some credit card companies issue convenience checks along with your credit card. With this, you can write a check to yourself and then cash it or have it deposited into your account.
Warnings on Using Cash Advances
Cash advances are attractive for borrowers because they are convenient, no approval is needed, and the funding is very quick. However, remember that this type of short-term loan is taken against your credit line and usually involves high-interest rates and fees.
Typically, cash advances have a higher APR than the one offered for credit card purchases. The range is usually from 14% to 25%, a steep rate for loans. There is also a cash advance fee that is commonly 3% to 5% of the requested amount. Lastly, there may be ATM or bank fees that will be charged when you take out a cash advance.
It is also vital to note that cash advances do not have grace periods. This means that interest rates will be applied immediately during the day that you withdraw cash. This is different from when you use your credit card for purchase because there is a cut-off date, and there are at least 21 days for you to settle your dues without incurring interest.
In conclusion, cash advances are helpful when you need immediate funding without putting in collateral or a loan application. There are several ways to acquire a cash advance using your credit cards, such as from the ATM, the bank, and convenience checks.
Although cash advances are very convenient, it is essential to note that they also come with steep interest rates and extra fees.