A cash advance is a short-term loan that allows you to withdraw cash against your credit card's available credit limit. It is essentially borrowing money from your credit card line of credit. You can get a cash advance through various methods such as withdrawing cash at an ATM, at a bank, or sometimes over the phone or with convenience checks provided by the credit card issuer. Key points about a cash advance:
- It typically involves fees, such as a flat fee or a percentage of the amount withdrawn.
- The interest rate (APR) on cash advances is usually higher than the rate for regular credit card purchases.
- Interest on cash advances begins accruing immediately, with no grace period.
- Cash advances usually have a limit that may be lower than your overall credit limit.
- They are often considered expensive and should be used mainly for emergencies.
Cash advances are different from regular credit card purchases and may have separate balances on your credit card statement. Because of the associated fees and high interest, they can be costly if not repaid quickly. In summary, a cash advance is a quick way to get cash using your credit card but it comes with higher costs compared to regular purchases or other types of loans. It allows you to access cash when needed but should be used cautiously due to its financial impact. This explanation is based on information from several financial sources about credit card cash advances, their features, and costs.
