What Is a Cash Advance? | Questions Asked and Answered by AdvanceSOS
A cash advance, short for credit card cash advance, is a loan against your credit card. With a cash advance, you can use your credit card at a bank to get a short-term cash loan.
And just like any credit card debt, you must pay your cash advance back the same way. So with the straightforward repayment method of credit card cash advances, they are great for many things. Think of it as “buying” cash with your credit card instead of goods or services.
How Does a Cash Advance Work?
If you only carry credit cards, you can run into trouble when you need cash. Despite mass digitization, there are still things you may need some cash for. A lemonade stand, for example, will prefer you pay in cash than using your Visa or American Express card. Fortunately, you can use your credit card to get a cash advance.
You can get cash advances from an ATM if your credit card has a PIN. You can also take your card to a bank that gives advances through the payment network on your card. To do this, you will need to show your ID. To know more, read: how to get a cash advance on a credit card without a pin.
Be aware that most credit card companies won’t let you take out a cash advance above your credit limit. Most people can only have a cash advance balance of up to a few hundred dollars. Therefore, if you have an emergency, don’t count on credit card cash advances to give you a lot of cash.
Why Are Cash Advances Expensive?
Cash advance fees are not the cheapest, that’s for sure. A dozen other cash options can be less expensive than a cash advance. There is truth to this, but not without good reason. Cash advance costs depend on several factors – many of which can be worth the extra bucks.
Fast Funding Speed
A cash advance can give you money in almost an instant. You can borrow money from your credit card issuer as fast as 1-2-3 over an ATM. This service is unique to a few cash options and one you cannot enjoy with a traditional bank loan.
Accessibility + Availability
Cash advances are always there for you in times of great need. Borrowing money with cash advances works 24/7 with an ATM. So, as long as you have your card and are near an ATM, a cash advance is within arms’ reach. Also, explore how you can get a cash advance online for an even more accessible and available option.
Your credit card company will not ask much to grant you a cash advance. The process will not even feel like borrowing. Draw funds like you do with a debit card – no extra steps needed.
No Collateral or Cosigner
A cash advance doesn’t need complicated requirements like collateral or a cosigner. So you don’t have to rush to complete a checklist before you can secure the money. If you need cash asap, you can get it now with a credit card cash advance.
Alternatives to Cash Advances
Cash advances are not perfect for every situation. A cash advance fee can be high if you can’t repay it by your next billing date. So, consider the cash options below if you find yourself in a tight spot. Remember that a loan should adjust to what you need, not the other way around.
Traditional Personal Loan
Get this cash option from a bank loan or credit union. The interest rate can be lower for a traditional personal loan, but the requirements can be daunting to pass. If your credit is low, this option can still cost a lot because you’ll pay more than those with better credit.
Friends or Family Members
Convincing close family or friends to lend you cash can always save you from high costs. So if it’s not too much of a hassle and you can do it, consider this option for practicality’s sake.
Overdrawing Your Bank Account
If you have a checking account, you can overdraw money there. The cost can be like cash advance APR rates, but the method is different and will be more convenient for you.
Pawnshop or Auto Loans
There are pawnshops and auto lenders on almost every corner, and you can always trust them to give cash with the right collateral. But that’s the catch – you need collateral. Suppose you don’t have a valuable item or a car. In that case, this cash option can be entirely unavailable to you.
In Conclusion: What Is a Cash Advance?
A credit card cash advance is an excellent cash option if you need cash fast and have a credit card. With just your credit card and PIN, get fast cash through an ATM anytime, anywhere. The only pitfall of a cash advance is its high costs., but you can always cut costs by repaying your credit card company on time.
Review your credit card agreement for more information on your credit card limit. Also, see what your credit card company’s fees are beforehand. These steps should help you make an informed choice on withdrawing money as a cash advance.