Whatever the reason, a credit card cash advance may seem like an attractive option. It is a short-term loan on your card account that can be used in situations where cash is the only accepted form of payment. However, it is important to understand that this type of transaction can have very costly consequences. Most of the time, taking out a cash advance is not a good idea.
A cash advance allows you to use your credit card to get a short-term loan from a bank or ATM. It is similar to using your credit card to buy cash instead of goods or services. A cash advance may seem like an easy way to get money quickly, but it can cost you a lot of money in interest and fees. Before you apply for a cash advance, make sure you are familiar with the terms and conditions so that you are not surprised by an unpleasant surprise.
It is best to avoid taking out a cash advance altogether if possible. Cash advances can be an important source of funds in case of emergency. However, always make sure you consider all your options with costs in mind. Your credit card statement should show you the different interest rates for your purchases, cash advances, and balance transfers.
In other words, if you need more than a few hundred dollars to address an emergency, a cash advance may not be the best option. You can minimize the interest you pay on a cash advance by paying the balance as soon as possible, even if that means paying before your bill arrives in the mail. Many responsible cardholders are surprised to learn that credit card companies don't allow a grace period for cash advances like they do for regular purchases. Depending on your credit profile and the type of loan you get, a personal loan might be less expensive than getting a cash advance on your credit card.
If you need cash in a hurry, there are ways to get money from a credit card without making a real cash advance, such as changing the way you pay your bills or getting creative with gift cards. Usually, your credit card provider does not extend merchant cash advances, but they are offered in partnership with the payment processor for credit and debit card sales. If taking out a cash advance is your only solution to withdraw money quickly, make sure you know all the costs involved and develop a plan to pay it off. Reynolds recommends contacting your credit card company before writing a convenience check to ensure that the cash advance does not exceed your limit.