What is a credit card cash advance?

What is a credit card cash advance

The simplest and most precise explanation of “Credit Card Cash Advance” is the withdrawal of money or removal of money from a credit card to physical cash or borrowing money from your credit card company and being charged from your account.

It’s a simple and expensive loan!

There are costs incurred in credit card cash advance sometimes like, withdrawal limit and percentage rate charge for transactions

Now let’s see the basics of credit card cash advance.

The process of withdrawing cash with a debit card at an ATM machine is similar to that of withdrawing money with your credit card and this is what is called ‘’Credit Card Cash Advance”

The only difference is the terms used to define them for credit card withdrawal. It is called ’Credit Card Cash Advance’’ while a debit card is called card withdrawal.

Using your credit card to access funds is essentially borrowing money from your credit card company, and they charge your account.

This costs you because it normally has a percentage rate (APR) and not just that you also have a limit of cash which you can advance and that is termed as a credit card line.

This is not the only form of cash advance  for credit card users sometimes, the credit card company mail checks to customers who link the emails to their accounts, this is called convenience checks; if you deposit these convenience checks it is also considered a form of a cash advance you will be charged a percentage rate for the transaction

You may also like: How to get a credit card

When to consider using a cash advance?

Credit Card Cash advances are considered to be a significant source of getting money, especially if you have an emergency, it is a dependable source.

Still, if you are thinking of using this important source to get funds frequently, you should consider using it only when you have cash-dense issues or desperately need money.

However, I still advise you to exhaust all your options of withdrawal first.

Debit vs. Credit Cards and credit card cash advance

Factors to consider

Before you get a credit card contact the company to know the detail of the following rules and factors;

  • APR (percentage rate): The APR for cash advances is most a times  higher than purchases done with credit card
  • Transaction fee: each credit card cash advance cost a fee 

Ways to limit the fees associated with a cash advance

#1. Understand the financial involvement: Transaction fees are charged in percentages on all advances done. Therefore we urge you to withdraw as much as you need at once to avoid unnecessary charges

#2. Plan your repayment: Users of standard credit cards are given a period between the time of purchase to the date of payment when interest rates start accruing, but for credit card cash advance, there is no grace period.

Recommended post: Kroger Credit Card: Application, Reward, and FAQs

How you can avoid taking a cash advance

Make purchases with your credit card:  Make purchases with your credit card and get an interest and transaction charge to your card instead of getting a cash advance.

Avoid redundant purchases:  Before making a cash advance, make sure the purchase is worth it to avoid an extra charge on your account

Build an emergency fund: On a few occasions, emergencies arise, and you are forced to spend on things like car parts and health-related issues even if it wasn’t in your budget, so we advise you to build an emergency fund to avoid the use of credit card cash advances for these kinds of transactions

For more information concerning your credit deposit, cash advance percentage rate, and any kind of question concerning the purchase and advance credit card uses always contact the company

Was this article helpful? Subscribe for more interesting tips

Leave a Reply