Cash in advance is identical to an essential loan that is usually funded through a credit card account or from a line of credit. You feel the need of such cash when there is an urgency to pay but you do not hold enough cash in hand at that point of time. Many credit card providers offer such facility to their customers. So, are you eager to know about this kind of advance cash? Well then, you have reached the right place.
Why Advance Cash is Needed?
It is true that credit and debit cards are accepted at a majority of places. However, there are a few sellers and service providers that need instant payment by cash. For example, the shopkeepers at small medical stores will require payment only in cash. In this situation, you can go for a personal loan. However, taking such a loan for small cash amounts can be expensive. Even debit cards may not help, as they pay the amounts only if there is sufficient balance existing in your bank account. Therefore, at the time of a cash emergency, taking out cash advance against the credit card balance may prove to be helpful.
How Do You Take Advance Cash?
The cardholder usually obtains cash in advance at an ATM with the help of the PIN, also known as the Personal Identification Number that is always assigned by the issuer of the credit card. Moreover, there are a few credit cards that also offer convenience checks that you can use at places where credit cards do not work. These checks are also a form of cash advances.
Although this may seem very simple, but there are rules to follow. The maximum amount to be borrowed as well as the frequency of the number of advances allowed depends upon the terms and conditions of the credit card agreement. Together with the credit limit associated with a line of credit or credit card, the issuer will typically also specify a cash advance limit that can be same as the available credit limit or just a percentage of it.
For the ATM to give you the requested amount, it is necessary that that amount does not go beyond the applied cash advance limit. In case the amount is above the set limit, you may still obtain the money or the convenience check may get passed but a flag may be raised for this activity. Further, the extra amount that you withdraw may charge you a penalty fee.
Do You Pay for Taking Cash in Advance?
Yes! In fact, the option of cash advance can be costly. In addition to the high rates of interest charged on the borrowed money, most credit card issuers usually demand high fees for taking cash in advance. The rule is that any borrowed money in advance is added to the balance owed along with finance charges and any relevant interest payments.
It goes without saying that the interest rate that applicable to cash advances is very high, which is even more than the applied rate on the purchase of a credit card. Further, credit card monthly payments also get credited with initially a lowest interest rate. This indicates that an advance may remain for a longer time on the account and be subject to higher rates until the full debt is compensated. What’s more is that you will not get any grace period for advances. Furthermore, interest starts accruing instantly on cash advances. Above all, a cash advance through an ATM is costlier than other methods. A majority of ATMs tax the consumers with fees demanded by the owner of the machine, which is mandatory to be paid along with the fees that the issuer of the credit card charges for the credit service. Therefore, many experts recommend exploring other ways of paying cash, for those who cannot afford to pay these interests and fees.
Tips to Handle Cash in Advance Affordably
- Always go through your credit card agreement to know the fees and terms.
- Take help of cash advances only for real and unforeseen emergencies such as unpredicted medical expenses.
- Always spend within the limit set.
- Take out how much you require, not more than that.
- Avoid purchases if you have not repaid the pending cash advance amounts.