If you need extra cash for an emergency expense or anything else, a credit card cash advance can help. Cash advances provide instant cash you can use on any purchase without any questions asked. Knowing how to get a credit card cash advance can help when you need it the most, but they aren’t the best way to get extra cash. This article will explore how to get a cash advance from your card, the pros and cons, and viable alternatives.
What is a cash advance on a credit card?
A cash advance allows credit card holders to borrow cash against their existing credit lines. This is different from making a purchase with your credit card. The funds from the cash advance go into your bank account, and you can withdraw the funds at a local branch or ATM. You may have to use a cash advance if the merchant you are doing business with does not accept credit card payments.
Benefits of taking a cash advance on a credit card
A cash advance has several advantages.
Borrowers can quickly access their funds without going through an additional application process. Funds get deposited into your bank account right away, the perfect arrangement for emergency expenses.
Speed and convenience are the driving forces behind most credit card cash advances.
Drawbacks of taking a cash advance on a credit card
Every financial product has pros and cons, but credit card cash advances have alarming disadvantages.
- Credit card companies often charge cash advance fees,
- Each cash advance puts you deeper into debt, and the high interest rates on credit cards will result in debt accumulation.
A cash advance can help during an emergency, but you don’t want to rely on them often.
Falling behind on debt and not making minimum payments can also hurt your credit score. Your credit score is an important number that impacts your interest rate on loans, how much lenders let you borrow, and key elements of your life. Your credit score is one of the influential factors that impact how much financing you can receive for a large purchase like a house or car. Letting it fall because of cash advances can make those big purchases more expensive.
Step-by-step guide to getting a cash advance on a credit card
When used responsibly, a credit card cash advance can be a good thing. You can follow these steps to get a cash advance on your credit card.
1. Check with your credit card issuer to ensure cash advances are allowed
Not every credit card issuer lets you take out a cash advance. You should look at your provider’s website or contact them if their policy on cash advances isn’t clear.
2. Understand the fees and interest associated with a cash advance
Typically, cash advances aren’t free. You may have to pay a cash advance fee, and the new balance on your credit card accrues interest.
3. Ensure you have sufficient credit limit to cover the cash advance
Maxing out your credit limit can create several problems, such as higher fees, an unusable credit card, and a lower credit score. The difference between your credit card balance and your limit reflects the remaining limit you have available. Many credit card issuers limit cash advances based on a percentage of the credit limit, but borrowers with high balances risk maxing out. Reviewing your credit card balance and limit can help your request.
4. Withdraw the cash advance at an ATM
After discovering how much to borrow, it’s time to withdraw your cash advance. You don’t have to submit an application or inform a representative about your request. Credit cardholders can get a cash advance online and withdraw their funds through an ATM.
5. Monitor the balance in your credit card account
Keeping a careful eye on your balance can help you avoid maxing out on your card, and you may pay it off sooner. Getting your balance back to zero sooner will minimize interest and help improve your credit score. That’s because a low credit balance helps improve your credit utilization ratio, a metric that influences 30% of your credit score.
6. Repay the Cash Advance Promptly
Cash advances typically start accruing interest immediately, so it’s crucial to repay the amount as soon as possible to minimize interest charges. Refer to your credit card statement or contact your issuer for details on repayment options and due dates.
Alternatives to taking a cash advance on a credit card
A credit card cash advance can help when you are in a financial pinch, but you shouldn’t rely on them. Even when you need cash to cover an emergency expense, you can use several alternatives to raise cash quickly. These alternatives are less expensive than credit card cash advances.
1. Borrow from family or friends
Family and friends can help you out if you need extra cash. Some people will be happy to give you cash without asking for repayment. Even if presented with this type of offer, you should make it a point to repay those obligations.
2. Take out 0% cash advance on your bank account
Borrowing from family and friends isn’t the only way to borrow money and potentially not have to pay back any interest. Some banks let their clients take out 0% cash advances that get paid back through future deposits. These 0% annual percentage rate (APR) cash advances are more common with online banks that typically provide more flexibility than traditional banks.
3. Use a peer-to-peer lending platform
Peer-to-peer lending platforms can help you raise additional cash for emergency expenses. These apps have an application process and look at your finances before letting you use their platforms. You might have a faster turnaround with the other methods, but these platforms are worth a closer look.
4. Personal loans
Compared to credit card cash advances, personal loans often have lower interest rates and fees and offer fixed repayment terms. Peronsla loans also have higher borrowing limits, allowing you to access more funds if needed for larger expenses.
If you need personal loans now, MoneyLion is here to help! MoneyLion offers a service to help you find personal loan offers based on the info you provide. You can get matched with offers for up to $50,000 from our top providers. You can compare rates, terms, and fees from different lenders and choose the best offer for you. You can also use the loan funds to pay off other existing debts.
Get Extra Cash When You Need It
Credit card cash advances appeal to consumers who need extra cash for emergency expenses. While it’s good to have extra funds available, superior alternatives let you access the same cash for a lower cost.
What is the maximum amount of cash I can get from a cash advance?
The maximum amount of cash you can get from a cash advance depends on your credit limit, balance, and the issuer’s card agreement.
How quickly will I receive the money from a cash advance?
You can instantly receive the money from a cash advance.
How will a cash advance affect my credit score?
A cash advance can hurt your credit score if you do not repay the debt.