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Credit cards are convenient, eliminating the need to carry cash around and enabling you to make purchases at several locations around the globe. However, we all need cash every now and then; and whenever you need immediate cash, you can receive a cash advance from your credit card issuer. Getting cold hard cash from your credit card provider is very easy; you only have to insert your credit card into the nearest ATM machine and request the cash advance amount. Credit card holders can easily get a small percentage of their credit limits as cash advance whenever they wish.
Although getting a cash advance looks like an easy way to get hold of cash, it can burn a large gaping hole in you pocket. As soon as you receive your cash advance, the amount you received will be added to the balance payable to the bank along with interest and any other charges applicable. The interest charged on cash advances depends on individual credit providers, but it can go as high as 23 percent.
You will also have to pay a fee on the cash advance, and this can be anywhere in the range of 1–4 percent of the cash advance you have received. You also do not have a grace period to pay off your cash advance before it starts accruing interest, which means that your cash advance starts accruing interest as soon as it gets out of the ATM machine and falls into your palms. Plus, you will have to pay the ATM fees charged by the bank. The fee on the cash advance, the interest on it, and the ATM fee makes the cash advance an extremely costly option even in case of emergencies.
Before you even consider the option of receiving the cash advance, you must thoroughly read and understand the terms and conditions of your credit card, especially all those things in fine print. Avail of the cash advance option only if it is a matter of life and death. For instance, you might have to pay an urgent medical bill when you are vacationing abroad and need some cash right away. This is the time to get hold of the cash advance. Avoid withdrawing your cash advance to pay for gas, hotel rooms, or groceries. The cash advance limit is always lesser than the credit limit allowed to card holders, and card holders must know how much they can obtain as a cash advance.
Even if you must receive the cash advance, do not withdraw it all. Take just what you require so that paying it back becomes easier. Using credit cards with $0 balance to avail of the cash advance is a smart option because banks usually use your payments to pay off balances at a lower rate of interest first, which means that your cash advance will continue gathering a high rate of interest till your other balance amounts are paid off. Never make another purchase on the card till you have paid off the cash advance in full.