What is the cash advance service?
This is a service that is provided by most credit card users. The service allows cardholders to withdraw cash, either through an ATM or over the counter at a bank up to a certain limit.
Usually easy to obtain, a cash advance may be useful for businesses with less-than-perfect credit.
How cash advance credit cards work:
These are relatively easy to get and don’t require you to have money available in your bank account. They can be regarded as short term loans that you are able to take against your credit card, up to a certain amount.
Most credit card companies won’t allow you to take the whole amount of your credit limit in the form of a cash advance, however.
It may be one of the costliest ways to get your hands on some cash as there are usually a variety of fees and expenses that are involved.
Interest rates on cash advances are usually much higher than the regular interest rate on your credit card, so you need to make sure that you can afford this.
Interest starts building up on the day you take out the advance.
The cash advance should ideally be used in extreme emergencies. It can also help you avoid overdraft fees.
It’s important to have a plan for how and when you’re going to pay the advance back.
Ways to avoid taking out a cash advance:
- Make purchases with your credit card. By swiping your card, you can avoid having to withdraw cash.
- Avoid making unnecessary purchases.
- Check your balance to make sure that you have enough finance available.
- Create a budget to make sure that you know exactly how much you’re spending every month.
- Start an emergency fund which you can use instead of opting for a cash advance service.
