A cash advance or cash advance with a credit card, will allow you to get money quickly despite the risks and charges to consider, since it is a loan that the customer can request from the bank at any given time, with immediate effect, since the money is delivered instantly.
In this way, the customer borrows money from their credit card limit to count on the monetary amount in cash. Next, you will learn everything about the cash advance.
What is cash advance?
The cash advance is the action of making a cash withdrawal within the credit card limit. The cash advance can be completed using an ATM at a branch of the financial institution where the customer has a bank account, or by phone.
In addition, the cash advance allows the customer to withdraw cash (as if it were a debit card), being especially suitable for emergencies, when you need to pay only in cash, goods or services.
How does the cash advance work?
The cash advance works in different ways, depending on the method you choose to do it:
- Using an ATM, where you'll need your credit card PIN to get the cash. If you don't have the PIN that corresponds to your credit card handy, banks allow you to request it on their Internet websites.
- Going to one of the offices, where the holder must present a valid identification document to perform the cash advance.
- Through a telephone call, to transfer the money from the credit line, to an account in the customer's name. But this last option is not offered by all banks.
In general, the cash advance amounts to a maximum of 30% of the credit card limit or a minimum of $100. What will be deducted from the available credit is the amount of cash requested, together with the corresponding fee or commission.
What are the cash advance fees?
The amount that the bank charges in advance to the customer who made the cash advance, may range from 3% to 6% of the amount corresponding to the cash advance, or charge a one-time commission of $10, which you must pay even if the money is returned the next day.
And with the cash advance requested by the customer, including the fee to be paid.
This means that if a customer has a credit card for 1,000 dollars and asks for an advance of 30% of their credit limit, equivalent to 300 dollars, the fee or commission for the cash advance will be deducted from this amount.
On the other hand, apart from the fact that the charge of the cash advance fee is contemplated, it must be taken into account that the annual interest rate on this type of transaction It is higher than the amount that prevails over consumption made with a credit card. This implies that the balance generated by the cash advance is presented separately, to which it is generated with the usual expenses within the assigned credit line.
Finally, if the cash advance is withdrawn using an ATM that is not part of the bank network where the customer has their credit card, it is very likely that the fee for this concept will be even higher.
How are cash advances made with a credit card paid?
The procedure for paying cash advances is similar to the usual consumption with credit cards: By phone, sending a check by mail, through your bank's Internet portal or with the mobile app provided by your financial institution.
As the interest rate on cash advances is higher, any payment you make will be used by the bank to settle the cash advance debt, because this starts to generate interest immediately.
What happens if I don't pay a cash advance?
In this case, your debt with the bank will increase, given that the interest rate that prevails on this type of transaction, is higher than that established for ordinary consumption with a credit card.
What happens if I pay a cash advance ahead of time?
In the first instance, you will be able to solidify your credit reputation with the bank, by paying your debt on time.
In addition, it will prevent the debit balance from growing exponentially, especially since the interest rate for cash advance is higher than for any consumption with a credit card.
In short, cash advance may be an option for dealing with financial emergencies, since it allows you to have money immediately, even outside the bank's service hours, when using an ATM, apart from the fact that your request does not need verification or approval by the bank.
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