A cash advance is the act of withdrawing cash from your credit limit by using your credit card. Cash advances should only be used for emergencies due to cash advance fee and high APR. Cash advances can be made at an ATM, bank or, in some cases, by telephone. A credit card cash advance is a withdrawal of cash from your credit card account.
Basically, you're borrowing with your credit card to put cash in your pocket. However, accepting a cash advance by credit card has costs and, in some cases, limits on the amount you can withdraw. A cash advance allows you to use your credit card to get a short-term cash loan at a bank or ATM. Unlike a cash withdrawal from a bank account, a cash advance should be returned just like anything else you deposit on your credit card.
Think of it like using your credit card to buy cash instead of goods or services. A cash advance is a short-term loan from a bank or alternative lender. The term also refers to a service provided by many credit card issuers that allows cardholders to withdraw a certain amount of cash. Cash advances are generally high in interest rates and charges, but they are attractive to borrowers because they also have quick approval and fast financing.
To request a cash advance with a debit card, all you have to do is go to a branch of a local bank or credit union and talk to a cashier. A fee will be charged for requesting the advance, usually a small percentage of the total amount withdrawn. Your cash advance line is almost always considered separate from the rest of your credit balance. This will be expensive if your credit is not good, but interest and term charges will still be more favorable than a cash advance.
Ask yourself if the purchase you plan to make with your cash advance is worth the additional fees or if you can wait. The APR for cash advances is the annual percentage rate applied to the money you withdraw from your card. First, the interest rate charged by a credit card on cash advances is usually much higher than the rate charged on purchases. If they are becoming a habit, or if you find that you regularly need a cash advance to make ends meet, then you need to make drastic changes to the budget and expenses.
The most common methods for obtaining a cash advance with a credit card are convenience checks, ATMs, or bank tellers. Generally, companies with less-than-perfect credit use cash advances to finance their activities and, in some cases, these advances are paid with future credit card receipts or with a portion of the funds that the company receives from sales in its online account. If you have multiple credit cards, minimize the cost of a cash advance by using the card with the lowest APR for cash advances and not using a card with a high balance. In fact, some card issuers send checks periodically in the mail as a way to entice consumers to get a cash advance on their cards.
Unlike a purchase transaction, when a cash advance is made with a credit card, there is no grace period. The APR for cash advances is in the interest rates section, while the charges charged are listed along with the other charges. Cash advances do not have a grace period such as a purchase or a promotional period such as a balance transfer. Unlike credit card purchases, cash advances do not offer a grace period and start charging interest immediately.