How to Use Cash Advance on Credit Cards
Cash advance is basically a withdrawal of cash from the credit card account. You know that credit cards are generally designed for shopping – purchasing various goods in stores, paying for services, ordering goods and services online or by phone. But sometimes, you come find yourself in situations when you need some cash and often you need it quick. It’s technically easy to get a needed amount of cash from an ATM the same way as with a debit card, but you need to know that in case of a credit card it will be expensive for you. We will try to give basic information about using credit card cash advances and how to make it less expensive.
First of all, when you withdraw cash advance on a credit card the money are taken from your credit card limit. You need to know that available credit limit for cash advance is usually twice as low as the total credit limit. So if you go to an ATM the first day you get a credit card and take half of your credit card limit you will spend all your limit and will not be able to use this card until you submit a minimum payment for your balance. After you get a cash advance it will be shown in your statement along with other transactions.
The main problem with cash advance is that you start to pay interest for the money you withdraw right away – there is no grace period for that operation. And it is even worse that the interest rate is usually much more than a credit card purchase interest rate. And to pay off your balance you often need to pay off your credit card balance first and then you start paying off your cash advance. So it is better to consider cash advance money are the last chance – it is a very expensive operation and it is better to look for other options.
If you stil want to to take cash advance you have to insert your credit card in an ATM just like a debit card and then type a PIN number, that you’ve received from a bank or chosen yourself when applied for a card. Banks usually charge a fixed transaction fee or percentage of the amount you withdraw (or both). This charge varies from 1% to 40% so check the fine print of your agreement to find out exact rates.
There is another way how you can get cash advance on your credit card. Most groceries and pharmacies do offer an option to get cash back with the purchase. This is a way cheaper than cash advance from an ATM but requires a minimum purchase. Just buy a can of coke and take your cash back.
To recap here are fact that you need to know about cash advance: Interest rate on cash advance is much higher than APR on credit card purchase. Grace period doesn’t work with cash advance. Minimizing or eliminating usage of cash advance is a good idea for money saving.
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