Cash advances can be an attractive source of quick credit. They’re easy to acquire, don’t need a lengthy application process, and are pretty much immediate. So you can see why some people might choose the cash advance over personal loans and even cash loans.
Although you’re probably familiar with cash advances to some extent, there are a few details that some people aren’t completely familiar with. Here are 5 things you should know about cash advances to help you maximize their benefits.
The Transaction Will Incur a Fee
Most people are surprised to find a fee outside of the cash advance indicated in their bill. Before you pick up the phone and call your bank, it’s important to know that the transaction will incur a fee. This basically pays for the processing of your cash advance similar to most other transactions.
The fees associated with a cash advance change from bank to bank. But you can expect the cost to fall within 3-5% of the amount that you take out. So make sure you factor that in so you won’t be surprised when your bill arrives.
You Can Impose a Limit
If you think you might be prone to taking out a cash advance that’s more than you can afford to pay back, then you might want to consider imposing a limit. Call your bank to tell them the maximum amount that can be authorized for a cash advance. You can even set your limit to zero if you want to make sure you don’t accidentally take one out.
The Grace Period is Waived
Anyone with a credit card knows that the best way to avoid interest fees would be to pay for the statement balance in full. That’s because interest rates don’t accumulate until after a grace period. In the case of a cash advance, this grace period is lifted.
Simply put, this means that from the moment that you take out the advance, the interest will start to run. So expect to pay slightly more than you took out when your statement makes its way to your home.
You Can Save On Interest with a Balance Transfer
If you think that the repayment might be a little too steep because of the interest rate imposed by your bank, you have the option to try out a balance transfer. Basically, this lets you transfer your statement balance to a credit card with a lower interest rate. In effect, you’ll pay much less than you would with a high interest card.
To get started on your balance transfer, call your bank and make the request. If your credit limit is high enough, then you’ll see the balance reflected in your chosen card in a maximum of 6 weeks.
There are Extra Fees for Foreign Cash Advances
If you’re traveling and you need a source of quick credit, then a cash advance can seem like a suitable solution. Keep in mind though that aside from the transaction fee and the interest rate, you’re likely to incur a foreign transaction fee as well. This can cost up to 3% of the amount you choose.
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Cash advances can be a smart, immediate source of credit in those cash-only moments. But make sure you know exactly what you’re getting before you grab it. These 5 facts about cash advances should deepen your knowledge about these convenient mini-loans so you can better manage the repayments once they’re due.