Are you short of cash on your credit card and need to buy certain things, but think it’s impossible? Well, there’s a solution. A card cash advance allows you to borrow cash on your credit card to meet some needs. However, it’s essential to be familiar with cash advance terms before moving on with the process.
A cash advance might seem like a fast and easy way to get cash, but it comes with fees. I’ll discuss everything you should know about a cash advance fee.
What Is a Cash Advance Fee?
A card cash advance fee is a fee that compensates the lender for taking the risk to lend you money. These fees depend on the terms and conditions of the lender. It could be a flat fee or a percentage of the cash advance. The fee might be deducted from the cash advance or held until the next credit card bill.
The main purpose of a cash advance fee is to assure credit card companies that you would pay. It might seem harsh, but if these fees were not fixed, it could be detrimental to the company. Also, that’s one of the many ways that credit card companies make money.
Cash advance fees include interest and up-front fees. Interest rates are high; they are about 10% higher than the usual annual percentage rates. Even with some credit cards, you start paying interest when you get your cash advance.
Meanwhile, up-front fees are usually a cash advance percentage or a flat fee. Your issuer will assign the fee to the greater one, and you have the right to ask for a calculation. Common up-front fees are about 10 USD, and it is credited to your account on the same day as the cash advance. So, if a cash advance of $200 is requested, the fee would be $20.
Most times, you’ll find the explanation of the fee in your account information. However, if there’s no information about a cash advance fee in the account information, you can contact the customer service department; the number is usually on the back of your credit card.
Can We Avoid Cash Advance Fee?
There’s no other way to avoid a cash advance fee than to avoid using a cash advance. However, you can reduce the cost of fees by:
- Reducing the cash advance amount you requested. This will also help reduce the interest since it starts piling up the moment you get the cash advance.
- Doing thorough research on credit cards with the best rate.
If all these have been done and the fees still seem high, search for other alternatives to get credit if you can’t afford the cash advance fee.
A cash advance is, no doubt, a lifesaver. Yet, it comes with its limitations, and not everyone might be able to take the risk. However, if you have read through this article, you must have understood everything about cash advance fees. If you can’t afford the fees, it’s best to check for other alternatives to cash advance.