Credit Card Cash Advances
Generally, the point of a credit card is that you can use it in place of cash under certain circumstances. In a world where credit cards and debit cards can be used for almost anything, there are still some circumstances in which you must use cash. In a cash emergency, it is possible to withdraw cash against the line of credit represented by your credit card. That is called a cash advance, and it’s an option cardholders can use in the event they are in need of actual currency.
For most credit card customers, the cash advance limit is a smaller percentage of your total credit limit as determined by the bank that holds your credit card. The dollar value of your credit limit, as well as your cash advance limit, should be plainly displayed on your monthly credit card statement, along with any associated fees and interest rates.
Getting a cash advance is a relatively simple matter: most credit cards allow you to use your credit card at an ATM, with the use of a Personal Identification Number (PIN). If the amount of your cash advance does not exceed your current cash advance limit, you should be able to receive currency with no problem. However, if you go over your cash advance limit you might incur penalties, the same way you would if you went over your credit limit.
The great disadvantage of getting a cash advance is that it is very expensive. Interest rates on cash advances are almost always greater than they would be on an identical amount incurred as a credit purchase. For instance, if your interest rate on credit purchases is 14%, your cash advance interest rate could be substantially more – even up to 23% or 24%. Also, interest on the cash advance continues to accrue at that rate until the balance is paid off. For that reason, it’s almost always better to find some other way to get cash than to rely on acredit card cash advance.
