Credit card cash advance is a service similar to using an ATM card. It allows using your credit card along with the ATM credit cardís PIN in order to withdraw the necessary funds rather than using a check or debit card, or applying to payday lenders. In fact, when you withdraw funds from a check or debit card, you use your own money.
However, credit card cash advance allows you to get access to the borrowed funds stipulated in your credit agreement. It is your daily cash limit, your overall credit card limit and the total cash advance limit that your credit card company is authorized to apply for that determine the amount you can borrow. It is important to understand that this type of borrowing implies high interest rates along with associated fees and the schemes that some companies use to get this money back.
Cash advances may also be delivered in a form of checks. Some companies send their clients such checks by mail, but when the customers use them to pay for anything, the same scheme as for credit card cash advance is being applied. So, if you use credit card cash advance, you should understand how this transaction will be processed. To be honest, it is not the most profitable financial service you can apply for.
The Schumer Box can be a good example of the rates and fees associated with cash advance transactions. Just look at your credit card statement in order to see your Schumer Box, or review the cash advance checks you have previously received. There you will find the rate applied to each of your cash advances.
You should also pay attention to any ATM fee included into withdrawal. It is also important to understand that the interest charges associated with cash advances take place when you start withdrawing money. Unlike making purchases or taking business loans, no grace period or delay is provided for credit card cash advances. Some companies used to add your payments to your card balance with the lowest interest rate. However, this is illegal according to the new credit card regulations. If you do have a cash advance, your credit card company must charge this payment first, as it has the highest interest rate.
So, how can you get the most benefit from cash advance? Firstly make sure that:
1. You understand the terms and conditions of your credit card, as well as its fees, credit limit and the way the balance is paid back.
2. Your credit card has zero balance and a free ATM.
3. You will be able to pay in back quickly.
Of course, there are other ways to get money fast, like consignment shops, equity credit line, bad credit payday loans for unemployed or peer-to-peer lending. Some of them are not as expensive as credit card cash advances. However, none of these schemes will provide you with extra cash in case you don’t have a debit card by your side.