How a Credit Card Cash Advance Works
Some people rely so heavily on credit that cash is unavailable when they need it. Individuals short on cash may consider a credit card cash advance. Credit card cash advances are an alternative to payday loans, but work similarly. Both can be costly and involve high interest rates.
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What it is
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Credit card cash advances are options for cardholders to borrow cash against their current balances. The amount of cash that is available for a cash advance is typically only a small percentage of the borrower's overall limit. Credit card companies will usually state the cash advance limit in the terms and conditions when the account is opened.
Cost
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Fees for cash advances vary, depending on the credit card company and type of credit card. The fees are typically very costly. Two calculation methods are often used to determine fees. Some card issuers use a percentage basis to charge the cash advance fee, sometimes up to 4 percent of the total amount. Others charge a flat-rate fee for cash advances. The fee is in addition to the interest charges.
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How to do it
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Customers wanting a cash advance can usually withdraw cash from any ATM. Another option is to bring the card to a bank for a cash advance. The cardholder would need to present identification and the credit card to the bank teller. If the account is delinquent or over-the-limit, the request may be denied. Interest will be charged on the amount borrowed and will appear on the credit card statement.
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