A cash advance is a lucrative option to obtain money quickly when in need. Although it should be used carefully as it comes with some limitations. Here we will be looking in detail about the cash advances.
What is a Credit Card Cash Advance?
When you obtain money using your credit card in advance then it is regarded as a credit card cash advance. Here you borrow some money through your credit card from the credit card company for some time.
However, you can’t obtain as much as you want and there are certain limits on the amount of money that you can get.
This is one of the fastest and easiest ways to obtain it when you need it urgently. This money can be obtained through various means some of which are as follows,
Cash advances via an ATM
This is the most used way to get cash advances from an ATM card. If you have an ATM card you can use it to get some cash advances when you need them.
Cash advances via convenience check
In this, you will receive a check in your mail which you need to deposit in your bank. After depositing the check you will get the required amount from the bank.
In-person cash advances
In this method, you will get cash directly from any bank branch as your cash advances. You just need to show your ID, your credit card, or any relevant document and within a few minutes, you will have your requested money.
How Does a Cash Advance Work?
You can think of a cash advance as a short-term loan that you take from your credit card company. While taking this loan you need to keep in mind some points.
First, there is a transaction fee that you need to pay when you cash advance. This transaction fee can be a percentage of the money you have obtained or a flat charge.
It depends on the credit card company and what sort of transaction fee it chooses. If the transaction fee is the percentage of your cash advance then it is advisable to request only such amount that you actually need.
And if it is a flat rate charge then obtaining money at once will be beneficial as it will save your extra transaction fee.
With transaction fees, there is also an interest rate that you need to pay when requesting a cash advance. Just like a simple process of borrowing from the bank when you get a cash advance, it is a short–term loan on which you have to pay interest rate too at the time of payment of cash advance.
But here interest rates are very high which makes the cash advance option an expensive option to choose. That is why it is advised to use cash advances only when you need money urgently.
How to Get a Cash Advance From a Credit Card
If you use a credit card more often than a cash advance from a credit card is an easy and simple way to obtain a cash advance.
You can get a cash advance from any ATM branch by using your ATM card and your PIN or you can request an in-person cash advance from any bank branch.
Also, you can receive a convenience check using which you can cash your cash advance or deposit it to your bank.
How Much Does a Cash Advance Cost
Whenever you request a cash advance you need to pay cash advance fees on which the cost of your cash advance depends. However, this transaction fee differs from company to company but generally, it will be some percentage of the amount obtained as a cash advance.
Also, there is an interest rate that you need to pay when you pay your cash advance to the credit card company.
Credit Card Cash Advance Limit
There is also a set limit under which you will cash advance. So you can’t avail cash advance as you want.
This cash advance threshold differs from company to company. Thus you need to know what is the limit prescribed by your company under which you can avail of cash advance.
How to Pay Cash Advance on a Credit Card?
You can easily pay cash in advance on your credit card either online or offline.
If you want to pay cash in advance online then you need to visit the official website of your credit card company or bank and can repay the due amount through mobile wallets, net banking, and UPI and payment cards.
And if you want to pay your cash advance offline then you need to visit the nearest branch of your credit card company and simply repay the cash advance either through cash or cheques.
However, whenever you repay your cash advance you also need to pay the interest amount which is applicable to your cash advance. Try to repay your cash advance as early as possible as it will save you the extra interest rate.
To conclude it can be said that although cash advance is a nice option to obtain money quickly at the same time it is very much expensive too.
The transaction fee and interest rate on the cash advance are generally very high which makes using this option expensive. Thus it should be used only in extreme emergency and if possible then other alternatives of a cash advance can opt.
However, if nothing is in sight then only the cash advance option can be used. And in that case, too you need to know the transaction fee and interest rate of a different credit card so you can plan accordingly.
1. What happens when you take a cash advance on your credit card?
A cash advance on a credit card is just similar to a short–term loan but without any further legal documentation.
When you take a cash advance on your credit card then you need to pay a transaction fee and interest on the repayment of your cash advance.
2. What is one disadvantage of using a credit card to get a cash advance?
One disadvantage of using a credit card to get a cash advance is the high transaction fee and interest rate that users need to pay on the cash advance.
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