About Online Credit Card Cash Advances
Cash advances are a little understood aspect of credit cards. In most cases, the cash advance limit is only a small fraction of the total available line of credit, but it can be easy to overdraw on the cash advance. If you are not certain about the cash advance policies on any particular credit card, call the toll-free customer service number listed on the card for clarification.
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Significance
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Cash advances can be ordered online from most credit card companies. The cash advance typically costs a percentage based fee. This is charged to the credit card balance. Some cards---usually those specifically marketed for cash advances---charge a flat fee. Most credit card cash advances cost between 20 and 25% of the amount requested in interest and fees.
Function
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ATM cash advance withdrawals also often cost an additional fee. Even if a card is still on a 0% introductory rate, in most cases fees and even interest must be paid on the amount of the cash advance. Some special cash advance cards do offer special 0% introductory rates on advances, but they commonly charge the fees in any case.
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Features
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Despite the downsides, credit card cash advances are superb alternatives to short term unsecured loans. They can also be good small alternatives to personal loans, which often have a minimum borrowing requirement of $5,000. When a person needs a small amount of cash in a short amount of time, a cash advance can help make ends meet at relatively sensible rates.
Considerations
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Cash advances have a negative effect on credit rating, even if you pay them back quickly. The impact isn't extreme, but it is a factor that can inhibit the borrower's ability to get access to credit in the future. Failure to pay back the cash advances will damage credit rating in the same way as missing any other bill will. Credit bureaus look for a pattern of using cash advances to pay basic expenses.
Effects
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If you think you might need to use cash advances, shop for credit cards that only charge flat fees for advances. This will help you to take cash advances more often while paying less overall. Do not use ATM machines to get cash advances so that you avoid paying those extra fees. Credit card companies issue credit checks that can be used at lower fees, although they take some time to receive through the mail.
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Resources
- Photo Credit Rob Thurman, Flickr
