When you need extra cash to pay for unexpected expenses, holiday gifts and more, your attention may quickly turn to your credit cards. Many people have heard about the credit card cash advance. However, they are often unfamiliar with what they are and how they work. By analyzing these advances, you can better determine if they are right for your current financial needs.
Bonus read – How to Apply for a Credit Card
Understanding Cash Advances
To get a cash advance on a credit card, you must have available credit on your account. More than that, it must be a substantial amount of credit. Most creditors will not allow you to take out an amount up to your credit limit in cash. Any amount that you borrow as an advance is simply added to your total outstanding debt that you owe to the credit card company.
Limits and Amounts
Before you take out a credit card advance, you understandably need to know how much money you have access to through your credit card. This varies from account to account. First, you need to know what your credit limit is. Second, you need to know how much of the available credit is available for an advance. This information is typically found on your last billing statement. Access your online account or call the customer service phone number.
What Types of Cash Advances Are There?
This is a term that specifically describes hard cash being taken out from your credit card. It converts available credit into cash, typically through an ATM withdrawal. Because of this, the primary option for a credit card advance is through a credit card. However, this can be through an account that you currently have access to or a new account that you open.
How to Apply for a Cash Advance
If you want to get a cash advance from a credit card, you understandably need to know what steps are required to complete this process. The process is simple and easy, and most people will be able to complete the process within a few short minutes.
The first step is to review your available cash limit on each of your credit cards. Some people may need to pull cash out of multiple credit cards to access the full amount of funds needed. You can review a billing statement, call the phone support line or access your online account to obtain this information.
If you have determined that you have enough cash available through your credit card, you can proceed to the next step. Otherwise, you could consider applying for a new credit card.
There are usually transfer fees associated with credit card advances. For example, a credit card company may assess a one percent fee on the total amount that you use as a cash advance. This amount can add up to a sizable amount of money, so keep this in mind as you take money out of your credit card. In addition, the cash advance amount may have a higher applicable interest rate than the rest of the account balance.
The next step is to determine where you can pull money out of the account at. This is typically completed at an approved ATM location. Contact your credit card company for the physical address of an approved ATM nearby. Bear in mind that you cannot use any ATM, and only approved machines are acceptable.
You also will need your PIN number for the credit card. Many people do not know their credit card PIN or have not set one up. You can request this information through your credit card company’s customer service number. Otherwise, you may need to establish a new PIN before you can pull cash out of your account. Some credit card companies require you to complete a lengthy process to obtain your PIN through the mail, and this can be burdensome.
If you have your PIN, simply follow the same basic usage instructions at the ATM as you would with your debit card. Keep in mind that some ATM machines have cash limits, so you may need to visit a few different ATMs if you plan to take out a considerable amount of money.
If you do not have access to your PIN, you can ask your credit card company to wire the funds to your bank account. There is typically a fee for this service, and it may take one or several days to complete. However, it does provide you with the ability to get cash transferred directly into your account.
How Does Repayment Work?
After you take money out of your credit card as cash, you will continue to receive regular monthly billing statements from your credit card company as you have before. The due dates generally will not change, but the monthly payment will be different. When you review the billing statement, you will notice that the standard credit line has a difference interest rate than the advance amount. You will likely also notice over time that the balance with the lower interest rate is paid off first. This can inflate interest charges for you until the entire balance on the credit card is paid in fully. In addition, the advance fee will show as a line item on the credit card billing statement. It is wise to pay this balance off in full to avoid paying more than necessary in interest charges.
FAQs We Know You Have
Because credit card advances are uncommon for many people, it is understandable that you may have many questions about the process. These are some of the most common questions people have when getting an advance on their credit card.
Q. What is a reasonable advance fee?
A. Some credit card companies charge a flat advance fee, such as $25 or $50. Others charge a percentage of the total amount of cash that you pull out. Because there is considerable variation on this, there is not a general or average answer to this question.
Q. Are there any other ways to get cash out of a credit card?
A. Using your PIN to access cash from your credit card at an ATM machine is the most common option available. Getting a wire transfer is also an option when the ATM machine option is not feasible. Most credit card companies only offer these options. If you do not need cash, however, you can always make necessary charges directly to your credit card or link your credit card to a payment service, such as PayPal.
Q. Is there any way to pay down the credit card advance balance with the higher interest rate first?
A. Nobody wants to pay more in interest charges than they have to. Some credit card companies will allocate payments toward your higher interest rate upon request, but this varies from company to company.
Getting a cash advance on your credit card is a wonderful financial solution to consider when you need cash without delay. As you can see, in many cases, it can yield hundreds of dollars or more in your hands within a few minutes. Consider contacting your credit card company today to learn more about this option.