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 each day starting from the day you borrowed the cash. Advances made on a credit card are often higher than other transactions made with the credit card.
Credit card cash advances are short term loans that are taken against your credit card. Here individuals use credit cards instead of debit cards to access this loan facility. Although taking credit card cash advance is very easy, they are a very costly form of loan since they have a variety of 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 is best done as soon as possible.
Before using the 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 you are to get from the advance.
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; travellers’ 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 an upfront and hidden fee 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 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.
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 purchases you made. This is so since many credit card providers channel minimum payments to items that attract lower interest rates. 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 channelled towards the highest APR balance.
Therefore it is advisable for a borrower accessing the credit card cash advance is to ensure that the next payment they make be the minimum amount plus the credit card cash advance. When possible it is best to pay off the entire amount in a single payment.
How It Is Better To Take A Payday Loan From A Legalized Moneylender
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 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.
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 interest charged on the advance come into effect as soon as you receive the money. Credit cards 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.