A cash advance is a service provided by most credit card companies that allows cardholders to withdraw a certain amount of cash, either through an ATM or directly from a bank or other financial agency. Cash advances typically carry a high interest rate – even higher than credit card purchases. In addition, there is usually a fee involved when using cash advance services. Unlike regular purchases, there is no grace period on interest – these charges start to accumulate immediately. Finally, it’s also important to note that cash advances do not earn reward points.
1. What are the fees associated with cash advances?
Cash advance fees can range from a flat fee or a percentage of the cash advance. The typical rate is either $5 or 2-5% of the cash advance, whichever is greater.
2. How does a cash advance affect my credit score?
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Cash advances do not directly hurt your credit score, but they can affect it indirectly in multiple ways. High utilization of your credit limit can negatively impact your credit score, and if you are unable to pay back your advance promptly, your score may suffer.
3. How do I get a cash advance from an ATM?
You can get a cash advance from an ATM by using your credit card instead of your debit card. You’ll need a PIN (Personal Identification Number) for the credit card, which you can request from your card issuer.
4. Are cash advances a good idea?
Due to the high fees and interest rates, cash advances should be used as a last resort when you’re in a tight financial situation and have exhausted all other options.
5. How quickly do I need to pay back a cash advance?
There’s no set timeline to pay back a cash advance, but interest starts to accrue as soon as the cash is dispensed. It’s best to pay off the balance as soon as possible to minimize the amount of interest accrued.