The majority of the credit cards allow taking a cash advance, which means you can withdraw money from the credit card simply from the ATM. Additionally, you will see many financial institutions promote the concept of advances. They will end up sending you blank cheques with the bills and statements. Deposit the cheque and simply take cash then and there.
Credit Card Cash Advance:
A Cash advance is a sort of loan from the one who has issued your credit card. And, it is available in two easy ways, either the ATM or by having a convenience check. However, the payment for the convenience with heightened fees along with the rate of compound interest which eventually doubles at the end.
What Comes With Cash Advance?
No doubt, the cash advance system sounds quite convenient, but it arrives with a lot of terms and conditions. Therefore, before you wish to consider cash advance you must know a few things that will help you recover the money later.
High APR– When it comes to a cash advance, the APR is higher than any regular purchase APR. This clearly means you are to spend a lot more when you use that particular cash advance. Moreover, the interest rate is whooping compared to other cash advance processes.
Cash Advance Fee– It is imperative that credit card charge fees when you are opting for a cash advance. For example, if you are withdrawing 100 USD as cash advances; you will get 90 USD after deducting the fee. Although that looks negligible but imagine the amount to be 1000 USD, you have to pay 50 USD fee! That’s a huge amount!
These two aspects make up a huge post costing if you want to go for a costly credit card advance. Now, let us tell you about some of the tricks that will help overcome high APR and fees.
Always Use PayPal Cards – ‘My Cash’
Users who have an existing PayPal account must connect it with the personal bank account. This way you might curate a way to get a reasonable cash advance.
For example, if you need a cash advance of 1000 USD, go for purchasing two of my cash cards with a credit card. Make your cashier fill each card with 500 USD. Get transfer money between bank accounts. Then, use it as per your needs and pay 7.90 USD as an advance cash fee instead of 50 USD.
Shop With Friends
Directly, many people might refuse you to lend 1000 USD. Therefore, go shopping, pay with your credit, and let him give you cash for that. If you want to be fair, take some percent less to cover the necessary points that he/she might earn with their credit card payment. With these kinds of tricks, you can easily avoid upfront cash advance fees and get cash at a much lower interest rate.
Try To Go For a Balance Transfer
Supposedly, you have a good position is paying your monthly credit card balances each month, make an exception for your required month. Instead of paying cash advance fee along with interest, try to transfer a big balance amount to your card which is settling for zero interest credit card for some time. Moreover, you can also go for no transfer fee, if it is available at your bank.
Use Credit Cards for Payments
First, try to sort and organize that for what purpose do you need a cash advance. If you instead use a credit card, you will have to pay quite less than cash. The fee is perpetually less than fees charged for a cash advance. Additionally, you also pay a low-interest rate based on purchases.
For example, when it comes to renting, you can easily pay your rent with a credit card via several different apps. They are responsible to make certain arrangements with the landlord.
If you consider income tax, there is a list of companies that are required to process income tax payments. They have the cheapest fee, approximately 1.89%. Therefore, you can come across multiple platforms to make your payments with a credit card.
Purchase Prepaid Debit Cards
If you observe you will see that many retailers offer debit cards on sale. For instance, there is a company called OfficeGuy, they are offering 30 USD off if you shop worth 300 USD with a visa gift card.
In general, two cards of 200 USD costs 206.95 USD (this includes a fee of 6.95 USD). Perform the same three times and you will get 1200 USD APPROX. Now, there are several ways to turn it into cash.
As a matter of fact, cash advances are not widely utilized by people, but if there is an emergency then you may opt for the process. The entire system is quite expensive if you go by the norm, but if you can follow these tricks, then you will end up having fewer burdens to recover the advance.
Questions you should ask yourself before you want to go for a cash advance
- Will I be able to recover the money in a month?
– The sole way to minimize high rates of interest.
- Can I go for some alternatives to a cash advance?
– try considering all the alternatives when it comes to a loan or advance repayment.
- Do I need to spend the money right now, or save it for later?
– If you were impulsive about buying something, you take a backseat and think whether this expenditure is worthy or not.
- Shall I go for help or advice?
– You can visit any typical adviser for a cash advance and they will offer you with some common examples. Try to go for some lifestyle changes that help you reconsider thinking about the massive expenditure that you are looking forward to.
Read More:- PayPal Alternatives: 10 Best Online Payment Apps
The Bottom line
This article gave you insights on how cash advances on a credit card work and what tricks you can apply to get lower fee rates or interest rates. But, always keep in mind to explore all categories when it comes to financing, no aspect must be left upturned.