Many people find themselves needing cash at some point but not having it on hand. If you are in the situation where you need cash to pay your bills or for other reasons, there are a few options. Many decide to borrow from friends or family or sell some of their belongings. If these are not viable options for you, a cash advance may be an alternative. A cash advance is essentially a loan from your credit card. It can be a useful way to get the money you need if you are in a pinch. Here are three things that you should know.
There Are Fees
If you are considering taking out a cash advance on your credit card, it's important to read the fine print carefully. There are fees associated with these advances, and they can vary depending on your credit card agreement. Typically, the fee for taking out an advance will be somewhere around $10 or 5 percent of the advance. Most credit card companies will charge the flat fee if you are taking out a smaller advance and a percentage fee if you are taking out a larger advance.
Interest Rates May Be Higher
Another thing to know is that interest rates on cash advances are usually higher than they are for normal purchases. The average interest rate on a cash advance is 23.68 percent. This is around 8 percent higher than the average interest rate for credit card purchases. The interest is also often charged as soon as the advance is taken out, so there is no grace period like there typically is with credit card purchases. It's important to keep these things in mind if you are considering an advance.
There Are Borrowing Limits
How much you are able to borrow as an advance is something else that needs to be taken into consideration. There are limits put in place for borrowing, and you cannot borrow more than your credit limit. Typically the borrowing limit for a cash advance is far lower than your credit limit as a whole. If you have a balance on your credit card, that will also limit how much of an advance you can take. Your credit score will also play a role in how much of an advance your credit card company is willing to give you.
Sometimes cash is needed for certain expenses or bills, but if you do not have it on hand, a cash advance may be the best option. There are a few things that you should know before taking out an advance on your credit card. There are fees involved, and your interest rate on an advance is likely going to be higher. Unlike with credit card purchases, there is no grace period and interest is charged immediately. There are also limits to how much you can borrow.
For more information on getting a cash advance, contact a local company like Cash Depot Inc.