The Pros And Cons of Taking A Cash Advance from a Credit Card
If you're ever in an emergency and need cash fast, one option is to take a cash advance from a credit card. Extracting a cash advance from a credit card is quite expensive. I'll explain three methods for getting cash and acquaint you with the associated fees and finance charges you'll pay for this transaction.
An ATM is the first method you can use to take out a cash advance. When you take cash at an ATM, you will need the PIN number assigned to your account when you received the card. Normally credit card issuers mail this separately from the new card. You receive them within a few days of each other. If you don't remember your PIN number, contact your credit card customer service. The PIN number cannot be provided by telephone. Your bank will have to mail a new one which may take up to a week to receive.
Aware of your credit card PIN number and ready to get cash? Now, you'll need to find an ATM that accepts your type of credit card. Certain ATMs may only accept specific cards. Just make sure your credit card's logo matches what types of cards the ATM accepts, whether it is Visa, MasterCard, American Express, or Discover. Insert the card, follow the prompts, and get the cash. It's that simple.
Another method for taking a cash advance from a credit card is with a bank teller. Taking cash out with a bank teller does not require a PIN number, only two forms of identification. The forms of ID required by individual banks may vary. You may take up to your total cash advance limit out when using a bank teller.
One final procedure for extracting cash from your credit card involves cash convenience checks. Cash convenience checks may be requested from your credit card issuer. These checks are similar to checks drawn on a checking or money market account. The only difference is that cash convenience checks are drawn from your credit card. They may be written to anyone and carry the same fees and finance charges as cash advances.
More Tips and Suggestions for Cash Advances
- Always verify your credit card cash advance limit and don't exceed it.
- Verify the credit card issuers transaction limits.
- Verify ATM transaction limits.
- Always know your PIN before you go to the ATM. If you guess 3 times incorrect, your card is taken by the ATM.
- If you get declined, contact your credit card customer service. Their
fraud detection system
may have blocked the transaction.
- You can only take 3 cash advances per day whether by ATM or bank teller.
- Cash convenience checks may expire. Check with your bank.
- Cash convenience checks may require activation before usage. Check with your bank.
Some final information I want to pass along includes the fees and finance charges on cash advances. When taking a cash advance from a credit card, there is a transaction fee charged. Usually it's a percentage of the cash advance, around 3% depending on the creditor. Transaction fees usually have a minimum of $5.00 to $10.00 or more, with no maximum amount. Quite costly! One of the lowest transaction fees I encountered is with Pulaski Bank. Check out their cards.
The annual percentage rate on cash advances vary from bank to bank. It's safe to say that the rate ranges from 20% to 30%. Most credit card issuers do not have a grace period on cash advances. The finance charges accrue from the date you take the cash out until the date it is paid back to the credit card. Use my
finance charge calculation tips
to see how much a cash advance may cost you. It may surprise you if you've never taken a cash advance from a credit card before.
To sum it up, taking a cash advance from a credit card is expensive. It's best not to take one out unless you have an emergency. If you have to take one out, keep in mind, the sooner you pay it off, the more you will save. Check with your credit card issuer for specific options on paying off the cash advance segment of your balance.
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