There comes a time in most people’s life when they say to themselves, “I could really use a bit more cash.” Life can be expensive. In the event of an unexpected cost, such as a medical bill, a legal expense, or an auto repair, sometimes you simply don’t have enough.
If you’re looking to secure more money in a short amount of time, a cash advance can be the right solution for you. A cash advance is a short-term loan taken out against your credit line, with a limit offered by your credit card issuer. A cash advance can be instant, or it may take a few days. Read on to learn all about cash advances, or use the links below to jump to a section of your choosing.
What is a cash advance?
A credit card cash advance is a short-term loan that gives you cash by borrowing from your credit card’s available line of credit. Imagine if you could use payday loans Oregon OH your credit card to purchase cash, and then pay off the balance of that cash at a later date. That is, in essence, a cash advance.
Here’s how a cash advance works: you can insert your credit card into an ATM, enter a PIN, and withdraw cash. While a debit card pulls from existing money in your bank account, a cash advance pulls from the available balance on your credit card.
Much like anything else purchased with your credit card, a cash advance must be paid back at the end of each month, or else it is subject to an interest rate. However, the cash advance interest rate is not the same as your standard credit interest rate. In most cases, the cash advance is many times higher, averaging over 21% for most credit issuers.
How much cash can you withdraw using a cash advance?
Because a cash advance pulls directly from your credit balance, you can’t pull any more than your monthly credit limit for a cash advance. So, if you have a monthly credit limit of $3,000, it’s guaranteed that $3,000 is the maximum cash advance you could withdraw. It’s also based on your available remaining credit balance for that month. If you’ve already put $300 on your credit card that month, it’s guaranteed that $2,700 is the maximum cash advance you could withdraw that month. That said, most credit issuers set their cash advance limit much lower than your monthly credit limit.
To determine the maximum cash advance available to your credit card, all you need to do is call your credit card issuer. Oftentimes, it’s also posted on your credit card statement or online credit card portal.
Cash advance terms
A cash advance certainly puts an oftentimes significant amount of cash into your hands quickly, but it does so at a handsome cost. Cash advances have many terms, and with many terms come many fees. Let’s review the terms of a cash advance.
Credit card cash advance limit
As mentioned earlier, a cash advance limit will never be larger than the available balance on your credit. However, in most cases, it will be significantly less-sometimes only 20%.
Credit card cash advance APR
According to , an APR is an annual percentage rate. Every type of loan has an APR, from home mortgages to credit cards. An APR is an interest rate from a yearly perspective. It’s the percentage of your total loan amount that you’ll end up paying in interest, charges, and fees over the course of a year. Your cash advance e rate as your credit card APR , but many times higher. For instance, if you have a cash advance loan of $1,000, for which you’ll end up paying $100 in fees throughout the course of a year, your loan has a 10% APR. A higher interest rate means you’ll end up paying a lot more than what you borrowed.