Cash Advance Fundamentals

Cash advance is a privilege, which cardholders enjoy borrowing instant money using their credit cards against the available credit in their accounts. It is a convenient way to get a small loan with no real paperwork. Cardholders can avail of the cash advance facilities at any of their nearest ATMs. Cash can be withdrawn against the available credit and within the cash advance credit limit, set by the banks. It is generally a small percentage of the overall credit limit assigned to one credit card. It is easy and for sure helps in emergency.



Why do you need a cash advance and when?

When you are badly in need of instant cash, the cash advance option on your credit card is the best way to go for. Get any ATM in your locality and withdraw money to your needs. Before you do this, make sure you know of your cash advance limits. Stay under your allotted cash advance limits. Even though you exceed your limit, the ATM will still dispense the money but this will result in exorbitant finance charges and penalties (like the over limit fees). If you do not know your credit limit, call at your bank customer care number and get information in details. Your probable queries should be like, how much of your total credit limit can be used for a cash advance? What is your available credit now for a cash withdrawal? Is there any maximum limit up to which a cash withdrawal can be processed in a single day? What are the fees associated with cash advances, namely fees charged using ATM for such transactions, etc.

Fees and interest rates for cash advances:

The fees and finance charges for cash advances are higher than those for a purchase. Whenever you withdraw money, you are charged with a transaction finance charge along with some other charges. The cash advance finance charge is added to your account on the very day you use the card to take cash and will continue to be chargeed until the full amount of the withdrawn money is not paid in full. You cannot avail of any grace period to pay it later and if so, additional finance charges will be assessed. Remember, even though you may pay off your outstanding balance for the card, you will still be charged with a finance charge for the cash advance. Sometimes your credit card checks are also considered as cash advance.

What should you do for cash advances?

In fine, I would say that you should stay very careful while using your card for a cash withdrawal. Before you get a card, you had better make sure that you know of the fees and finance charges along with the privileges of the card in details. Investigate into any different or additional finance charges/fees for cash advances. Try avoiding your card for frequent cash withdrawals. Use your card very wisely and enjoy the privileges of it. Withdraw cash when and only when it is urgent.