Stressed man holding credit card and bill

What Is Cash Advance? 

Cash advance is the process of obtaining cash through the use of a credit card. The credit card cash advance service is provided by charge and credit card issuers. This credit service allows a cardholder to withdraw cash either over the counter or through an ATM up to a set limit. 

For credit cards, this is called the credit limit. Credit cash advances mostly incur very high-interest rates and it often compounds on a daily basis starting from the time you borrowed the cash. Cash advances made on a credit card are often higher than other transactions made with the credit card.

What Is Credit Card Cash Advances? 

Credit card cash advances are short term loans that are taken against your credit card within its set credit limit. Here individuals use credit cards instead of debit cards to access this loan facility. Although taking credit cards cash advance is very easy, they are a very costly form of loan since they have a variety of cash advance fees and expenses that a regular ATM withdrawal does not have. 

The credit card cash advance usually does not carry a grace period meaning that the repayment on the cash advance fee and the actual advance cash amount is done as soon as possible.

Before using your credit card cash advance, borrowers are often advised to consider other alternatives to getting the money they require. As a borrower, always consider the high-interest rates charged on the credit card cash advance which in the end negates all the short term benefits when you get cash.

Who Needs Credit Card Cash Advance?

Individuals who wish to buy gift cards online using PayPal for their loved ones could use a credit card cash advance as a safe way of shopping online. Purchases that are categorized as cash advances are often treated as credit card cash advances.

Some of the purchases that banks consider as credit card cash advances even when you did not take the cash include; travelers’ checks and money orders, lottery tickets, foreign currency, casino gambling chips as well as transferring funds to a PayPal account.

A credit card cash advance can also be used by an individual who has no access to hard cash when making purchases where plastic money is not accepted, like the farmers market.

How Credit Card Cash Advance Works?

Usually, when taking a credit card cash advance, you are required to pay upfront and the hidden fees charged at 6% of the borrowed amount. The credit card cash advance can be accessed from an ATM or over the counter.

To obtain a credit cash advance from an ATM, you will need a PIN. When your account does not have a PIN set, contacting the customer care service of the card issuer will help you get the PIN. As soon as you get your account’s PIN, withdrawal of the money will be as when using a debit card.

When transacting a cash advance on credit cards, you must also know the credit limit of the card since the amount you can withdraw varies depending on the bank provider. You must also note that whenever you use cash advance you need to pay a certain interest fee.

Things You Should Be Careful About When Taking A Cash Advance

When you use your credit card to make any minimum payments, the money is applied to the purchases you made. This is so since many credit card providers channel minimum payments to items that attract lower interest rates but still, you need to remember that when you make such a transaction, a cash advance fee also applies.

This means you are not able to ask that the funds be used to pay off your credit card advance before clearing your purchases. Nonetheless, the law stipulates that any payment that is over and above the minimum has to be channeled towards the highest APR balance.

Therefore it is advisable for a borrower to access the credit card cash advance to ensure that the next payment they make will be the minimum amount plus the credit card cash advance. The total payment of the interest fee depends on the set interest fee charged by the credit card provider, whether minimum in amount or whichever is greater when paying off the bill. When possible it is best to pay off the entire amount in a single payment.

Is It Better To Take A Payday Loan From A Legalized Moneylender? 

Legalized moneylender offer payday loan to borrower

When in need of emergency funds, payday loans prove to be a reliable source of quick cash at a lower interest rate. The repayment period of the loan amount taken is often based on the outlined repayment schedule in the loan contract. This gives the loan repayment a grace period which causes ease in repayment of any loan taken by a borrower.

Payday loan requires a minimum criterion to enable approval. This includes age, proof of income and residency. Once you have applied for a payday loan the licensed moneylender often contacts you within 5 minutes and the money is transferred to your account within hours after you have submitted your application.

A payday loan is a form of a short term loan which helps you take care of your emergency financial commitments. The payday loan requires that you repay it quickly leaving you with no debt to be troubled about. This loan type is often tailored to your ability to pay it back within a set timeframe. Payday loans can be negotiable and the repayment plan adjusted to best suit the borrower’s budget. This helps greatly in terms of managing your finances since you are in a position to plan your finances.

Payday loans have simple policies on the rates offered. There is only one interest rate charged on the principal amount with no hidden fee charges. Payday loans offer flexibility in the repayment policy and when considering the repayment period, the payday loan is better than getting a credit card cash advance that has no grace period. Payday loans also allow low-income earners who have no access to a credit card to use this service.

When making consideration to take any type of loan, ensure you do your research prior to committing to one loan. Ensure you familiarize yourself with the interest rates charged, your ability to repay and the repayment period on the loan contract.

Conclusion

Cash advance is easily accessible through credit cards. However, a borrower finds himself in the endless cycle of snowball debt as he can always keep borrowing from his credit cards to roll over his debts. Once you have applied for a credit card cash advance, money is immediately made available to you. 

At the same time, the cash advance fee comes into effect as soon as you receive the money. Credit card issuers often channel funds lower than the minimum payment to items with lower interest. In order to overcome this snowballing effect, ensure that you make minimum payments plus the credit card advance or better clear-off the loan amount plus the interest accrued.

In case you are in a situation of being trapped in a debt cycle, it is ideal to apply for a payday loan instead. Payday loans have a lower interest rate especially from licensed moneylender like Raffles Credit. Raffles Credit has helped a lot of customers struggling to pay off their credit card debt, their professional financial advisor will help you and advise you the proven ways on how to eliminate such debts. Call their office to learn more about their loan offers!